Bitcoin halving: Are BTC prices headed higher? Is USD at risk?

Key points

• The Bitcoin halving reduces the reward for mining bitcoin, slowing supply
• The halving occurs every 210,000 blocks - this cycle is expected to occur on April 20th
• The price of Bitcoin is up 36% year-to-date
• In the 150 days following each of the previous halvings, Bitcoin has appreciated
• Bitcoin currently shares a -0.3 correlation to US dollar (3-month)

What is the Bitcoin halving?

The Bitcoin halving is a significant event set by the cryptocurrency's protocol, halving the mining reward and effectively reducing the new supply of bitcoin entering the market. This scheduled event plays a crucial role in bitcoin's economic model by limiting supply and potentially influencing its price.

When will the halving occur?

Occurring every 210,000 blocks mined or roughly every four years, the next halving is scheduled for block 840,000, currently estimated to take place on Saturday, April 20th, 2024. Bitcoin has depreciated over 10% in the past month ahead of this anticipated milestone.

Will the price of bitcoin rise with lower supply?

If demand for bitcoin remains constant or increases, the reduction in supply due to the halving is expected to lead to a price appreciation. This supply-demand dynamic is a fundamental economic principle that has sparked much speculation about bitcoin's price trajectory post-halving, especially given BTC's recent price action and heightened volatility.

BTC is up 36% YTD, will demand stay the same?

Bitcoin's current price level around $60k marks an appreciation of 36% year-to-date, with the cryptocurrency hitting an all-time high in March above $74k. This volatile start to the year raises questions about how investors will react to this halving in particular, Analyzing prior halving events, Bitcoin has seen appreciable growth 150 days after the event. This trend suggests optimistic market sentiment post-halving, though future demand will be influenced by a range of factors beyond the halving event itself.

What the halving could mean for USD

As with most commodities priced in US dollars, Bitcoin and USD share a negative correlation, historically. With a rolling 3-month correlation of approximately -0.30 between bitcoin and the USD, the halving event could have negative implications for the dollar - especially given the dollar's recent strength to start the year. However, this correlation has been positive before, as external factors could lead to the appreciation, or depreciation, of both assets simultaneously.

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