Key Takeaways:
Bitcoin and the wider crypto market have started to rise after the blockchain completed its fourth halving, reducing the reward paid out to miners for adding transactions to the network in half.
The event that limits the supply of the leading cryptocurrency occurs once every four years and is mandated in the blockchain’s code. The idea behind the halving is to create scarcity for BTC and allow it to protect its value, similar to gold.
Crypto Market and Related Stocks Start First Post-Halving Week on the Upside
Most investors were expecting little price action to occur following the block reward halving. Historically, the effects of the on-chain event take several months to reflect on the price of Bitcoin.
Bitcoin (BTC) climbed over 3% in value over the last 24 hours, closing in on the $67,000 range as fears about a deeper price correction allayed. Meanwhile, Ether (ETH) – the second-largest cryptocurrency by market capitalization – held steady near $3,200, rising 1.5% during the same period.
163 out of 173 tokens in the CoinDesk Market Index (CMI) posted positive daily returns in the aftermath of the halving. The broad-based CoinDesk 20 Index (CDI) rose by 3% in the last 24 hours, with layer-1 blockchain Near Protocol’s native NEAR token leading the charge.
The rebound of the digital currency market also extended to crypto-focused stocks. Shares of business intelligence firm MicroStrategy (MSTR) and crypto exchange Coinbase (COIN) rallied 7% and 12%, respectively, on Monday, 22nd April.
Bitcoin Mining Firms Showcase Strong Market Performance
Five of the largest publicly listed US Bitcoin mining firms by market cap – Marathon Digital (MARA), CleanSpark (CLSK), Riot Platforms (RIOT), Cipher Mining (CIFR), and Hut 8 (HUT) – have continued to gain in after-hours trading.
This can be attributed to the spike in Bitcoin network fees during the halving as users rushed to get their transactions recorded on the historic block number 840,000 – the first block to be mined after Bitcoin’s supply was cut in half. Transaction fees are an important revenue source for miners.
Stronghold Digital Mining (SDIG) was the crypto-related stock that posted the highest gains, recording a 35.3% bump to trade at $3.80 during after-hours trading on Monday. At the same time, Riot came in second with a 23% jump to $11.24.
The Valkyrie Bitcoin Miners ETF (WGMI) – a fund that holds stocks of mining companies and chipmakers including Nvidia – posted an 11% gain and a 3% rise after hours to trade at $16.69.
This price jump comes on the back of mining rewards being halved from 6.25 BTC per block to 3.125 BTC per block following the halving that occurred just after midnight on April 20th UTC.
This also coincides with the broader US market reporting gains after last week’s stretch of losses. The Nasdaq Composite and the S&P 500 jumped 1.1% and 0.8% on Monday. The markets’ positive momentum was attributed to easing tensions in the Middle East and upcoming earnings reports from major tech firms.
Experts Warn of Deeper Correction and Exponential Rise of Bitcoin Prices
In an interview with CoinDesk last week, Markus Thielen, founder of 10X Research, noted that the Bitcoin halving is not a bullish event. He also warned of market weakness for the next few months, with a deeper price correction in the cards. One of the reasons for this could be miners offloading their BTC inventory worth $5 billion into the market to keep their heads above the water after having a majority of their revenue cut.
Crypto hedge fund QCP Captial pointed out in a market update on Monday that the past three halvings – in 2012, 2016, and 2020 – were followed by an exponential move for Bitcoin’s price about 50-100 days after the event. The report also said that if this pattern were to continue, bulls would still have a few weeks at hand to build a larger long position.
At the time of writing, Bitcoin (BTC) is trading at $66,363 – up 0.4% in the last 24 hours.
Read More: Bitcoin Transaction Fees Plummets After Spike During Halving
