The final countdown to Bitcoin halving, you need to know this! (Part 3)

Should Bitcoin holders worry about the halving?

Holders do not have to worry about the halving event as it is a planned and expected event. However, holders need to be aware of the potential short-term market volatility before and after the halving. Historically, Bitcoin halvings have been associated with increased market attention and speculation, leading to price volatility. Holders are advised to approach the halving with a cautious and informed perspective, taking into account their personal risk tolerance and investment goals.

How does the halving affect miners?

After this halving, the block reward received by miners will be halved to 3.125BTC. With fewer block rewards, some miners may be unable to afford it due to rising electricity costs and hardware maintenance costs. As miners cannot earn enough income through new Bitcoins, the market may become more decentralized. As miners close their mines or switch to mining other digital currencies, Bitcoin's overall computing power may decline. Despite this, the speed of mining blocks and distributing Bitcoins into the ecosystem will not be affected because the mechanism adjusts the difficulty of verifying Bitcoin transactions to maintain a stable amount. On the surface, Bitcoin halving is a policy that simply reduces Bitcoin miners’ revenue, but in reality it is a means to control Bitcoin inflation.

As the fourth Bitcoin halving rapidly approaches, the market will be affected by a combination of established cyclical events and changing investment behavior. Historically, halvings have resulted in a reduction in the supply of new Bitcoins, leading to sharp market rallies, and prices may rise due to increased demand. However, this time around, the market situation will be more complicated due to the high level of institutional involvement through ETFs, as well as the significantly different activities of long-term investors and “smart money”. Together, these factors suggest that the market’s reaction to the upcoming halving event will be more nuanced:ETF Activity: Carefully monitoring ETF inflows and outflows is critical. A reduction in ETF purchases could signal an impending market downturn. Market Dynamics: Increased selling by long-term holders could indicate that prices are approaching a peak, which would have an impact on overall market stability and price levels.Halving Psychology: Be wary of the potential sell-off effect surrounding the halving event.