As Bitcoin approached its much-anticipated halving event, its value saw a dramatic decline.
On Friday afternoon, Bitcoin plummeted from a peak of $71,000 earlier in the day to a low of $65,100 around 3:40 PM on the Binance exchange, marking an 8% decrease.
The digital currency slightly recovered to $65,900, but still recorded a 2.45% loss over the week.
The halving, slated for approximately 3:30 PM on Sunday as per the Nicehash website, is expected to halve the generation of new Bitcoins.
Such events have historically influenced Bitcoin’s market value, often leading to price fluctuations as the date nears.
This particular halving occurs amid significant outflows from U.S. spot ETFs and changes in U.S. monetary policy, which have dampened hopes for an interest rate cut in June.
Additionally, escalating geopolitical tensions, notably between Israel and Iran, have pushed investors towards safer assets like gold and the U.S. dollar, impacting Bitcoin and other cryptocurrencies.
This shift was noted by Beto Fernandes from Foxbit, pointing out the impact of such discord on market dynamics.
Concurrently, last Wednesday, Bitcoin mining difficulty reached a record high of 86.3 trillion points.
This indicates increased competition among miners as they rush to accumulate rewards before they decrease post-halving.
Bitcoin Halving: Miners Adapt to Changing Rewards
The current mining reward of 6.25 bitcoins per block will soon drop to about 3.125 bitcoins.
Data from Wintermute shows a significant shift in miner behavior, with Bitcoin reserves at their lowest since 2021.
This contrasts sharply with behaviors observed before the 2020 halving when miners hoarded Bitcoin.
Bitcoin’s recent price surge, driven by U.S. Bitcoin ETF success, prompts miners to sell before the upcoming halving.
Despite these sales, the network’s hash rate has continued to rise.
This suggests that miners are upgrading their equipment and expanding operations to mitigate potential revenue losses from the halving.
This strategic adaptation aims to maintain profitability in the evolving cryptocurrency landscape.