Next month an update to the bitcoin network — referred to in industry circles as the “bitcoin halving” — will halve the token’s daily supply. After a record year, investors hope that this will send prices for the world’s most popular cryptocurrency into the stratosphere. Scott Chipolina, the FT’s digital assets correspondent, offers his (tentative) thoughts on an entirely unpredictable market.
In the space of a few short years I have witnessed cryptocurrencies like bitcoin rise and fall at speeds unimaginable in traditional, regulated markets.
After a catastrophic collapse, capped off by FTX’s infamous bankruptcy, some key regulatory victories for the sector — not least the launch of spot bitcoin exchange traded funds in the US — have brought crypto markets back from the brink.
The newly approved league of funds, issued by some of Wall Street’s biggest names including Fidelity and BlackRock, have pulled in an eye-popping $12bn in less than three months of trading. Today, bitcoin is valued roughly 150 per cent higher than it was this time last year, and last month it set a new record price of $73,800.
Making predictions in an inherently unpredictable market like crypto is a risky business, but it’s not too much of a stretch to suggest that there are more legs to bitcoin’s latest run.
Next month’s “bitcoin halving” event will slow the circulation of available bitcoins, and halve the incentive scheme for those mining firms whose business it is to verify new transactions on the network. The halving is a planned event which takes place every four years.
Bitcoin bulls say that this update will cement the cryptocurrency’s standing as a scarce, anti-inflationary asset, or as the common moniker puts it: digital gold.
“The previous bitcoin halving events in 2012, 2016 and 2020 all catalysed a big market bull run in the year afterward,” said Wolfie Zhao, head of research at The Miner Mag.
Next month’s halving has already made its mark on the sector. Mining firms recently splashed out more than half a billion dollars on new equipment in a bid to squeeze out less competitive rivals but also to ensure their own survival.
With so much market excitement you will not be surprised to hear that my inbox is full of “analysis” making lofty predictions of bitcoin’s future price, with some suggesting the coin will break through the $100,000 mark post-halving.
Not everyone is convinced: the halving is a planned event and, in theory, will be priced into the asset, unlike January’s launch of bitcoin ETFs, which were far from a guarantee and took more than a decade to achieve.
“The halving isn’t likely to cause a big market impact, certainly not comparable to what the exchange traded funds did in January,” said Ilan Solot, senior global markets analyst at Marex.
“It’s a very well-known event, and the market has already learnt how to price it in.”
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First some personal news: next week I’m moving to a new job at the FT and Hannah Rock will be in charge of FT Edit. My final pick is this article about the Baltimore bridge disaster. Our reporters put it together very quickly to answer some of the big questions around the crash, including what the economic impact will be and who will pay for the reconstruction costs (and they reveal that more than a third of US bridges are in need of significant repairs and should be replaced). It is a good example of how FT Edit tries to bring you deep and insightful analysis to help you understand major events.
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This week’s Lunch with the FT, our flagship weekly interview, was a classic of the genre. Over a Palm Beach fish special, Harriet Agnew grills Nelson Peltz — “bully” billionaire, thorn in the side of Disney and, yes, Brooklyn Beckham’s father-in-law — on everything from Trump to topless tennis.
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Fact of the week …
To an extent not widely appreciated, the world is now warming at a pace that scientists did not expect and, alarmingly, do not fully understand. In 2023, the hottest year on record, more than 90 per cent of the world’s oceans suffered heatwave conditions, glaciers lost the most ice on record and the extent of Antarctic sea ice fell to by far the lowest levels ever measured. From The world is warming faster than scientists expected
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Something to watch
If you’re having trouble keeping up with the confusing state of British politics our chief UK political commentator Robert Shrimsley and deputy opinion editor Miranda Green are here to break it down for you as the country gears up for local elections in May.
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