Bitcoin is set to experience its halving, a technical change written into the source code by its creator Satoshi Nakamoto, reducing the growth of its supply. This event, which occurs every four years, has historically been bullish for investors, with bitcoin’s price rising significantly after each halving. Investors can buy bitcoin directly or invest in SEC-approved bitcoin exchange-traded funds. The halving is part of bitcoin’s strategy to combat inflation and limit its total supply to 21 million coins.
Bitcoin mining stocks have historically performed well post-halving, with miners such as Marathon Digital Holdings, CleanSpark, and Riot Platforms seeing significant gains. However, year-to-date, mining stocks have had a poor performance due to the halving reducing miner rewards. This situation may improve over time as miners adapt to the new environment and become more efficient to withstand revenue shocks. Mergers and acquisitions in the mining industry are expected to increase as miners strive to scale and lower operational costs.
Large bitcoin miners have been investing in new technologies and expanding their mining capacities to stay competitive post-halving. Companies like Marathon and CleanSpark have acquired new facilities to diversify their operations and improve efficiency. Bitdeer, a Singapore-based miner, has developed new cryptocurrency mining chips to enhance performance and reduce power consumption. Speculative investors may find opportunities in investing in companies like Core Scientific, but caution is advised when considering riskier options like Hut 8.
MicroStrategy, a software company, is well-positioned to benefit from the halving as it holds a significant amount of bitcoin in its reserves. The company’s shares have outperformed bitcoin this year due to its leverage on acquiring more bitcoin. Another way to play bitcoin’s rise is to invest in Coinbase, a publicly traded cryptocurrency exchange, which has seen price target increases ahead of the halving.
Other cryptocurrencies related to bitcoin, such as Rune, Stx, and Ordi, could benefit from bitcoin’s price rise post-halving. These tokens offer different functions, such as enabling decentralized exchanges or creating fungible tokens on the Bitcoin blockchain. Traders are likely to pile into meme coins on the Bitcoin network as new tokens utilizing the new standard are expected to be launched. Runes, a new token standard for creating fungible tokens on Bitcoin, is expected to launch around the time of the halving, potentially sparking a market frenzy in transaction fees.
Overall, the bitcoin halving event is anticipated to have a positive impact on the cryptocurrency market, with potential opportunities for investors in mining stocks, technology companies, and alternative cryptocurrencies related to bitcoin. As the landscape of the industry evolves post-halving, investors will need to carefully research and assess the best opportunities to capitalize on the changing market dynamics.
