Hi there,

Welcome to Finance Friday. In today’s newsletter, I want to discuss the Bitcoin Halving and why it is important in the world of investing.

Finance Friday - The Bitcoin Halving

The Bitcoin Halving: Friend or Foe?

There will be a major event in the world of cryptocurrencies this month - an event that occurs approximately once every four years! Bitcoin, the world's most prominent digital asset, is gearing up for a halving – a pre-programmed event that cuts the number of new Bitcoins miners receive in half. This means a significant reduction in supply, which could potentially impact Bitcoin's price in the coming months.

What is Bitcoin mining?

Bitcoin mining is the process by which new transactions are verified and added to the permanent public ledger known as the blockchain.

Miners compete with powerful computers to solve puzzles, verifying transactions and adding them to a public record called the blockchain. They earn new Bitcoins (currently 6.25 per block, but this halves approximately every 4 years) and transaction fees for their work.

It should be noted that individual miners don't necessarily mine entire blocks by themselves. The computing power required for successful mining has become very high.

What is the Bitcoin Halving?

The Bitcoin halving refers to the reward Bitcoin miners receive as a reward. As stated in the previous section, the current reward is 6.25 Bitcoins per block. The halving cuts this reward in half. This time around, the estimated date falls around April 20, 2024. This means that there will be fewer new Bitcoins available to come on the market.

Why Should You Care?

The halving is a significant event because it directly affects Bitcoin's scarcity. With fewer new Bitcoins entering circulation, the existing ones become, in theory, more valuable. This scarcity principle is similar to precious metals like gold, which hold their value due to limited supply.

Is this an Investment Opportunity?

The price of assets is a combination of supply and demand. If the supply of an asset is reduced while the demand remains the same the price should increase. This may not occur immediately after the halving but may occur in the following months.

As always, when we talk about investments, what has happened in the past, with previous halvings, may not happen this time.

Will there be a significant price drop before the halving?

Historically, Bitcoin prices have experienced dips in the months leading up to a halving event. A significant drop has not yet happened but we cannot rule it out. Even in Bitcoin bull markets drops of 30% are common.

Is this time different?

Interestingly, this time around, Bitcoin reached an all-time high before the halving. This did not happen with previous halvings. Will this mean that there will be a drop after the halving? Or does this signify a change in investor sentiment, with a growing belief in Bitcoin's long-term potential? We can only wait and see.

We have already seen a demand increase in Bitcoin this year due to the BItcoin ETF approval in the USA. We will discuss ETFs in a future email.

The Final Word: Research is Key

The Bitcoin halving presents a unique situation. While the potential for a price increase exists, historical trends and current market conditions add complexity. Before making any investment decisions, thorough research is crucial.

• Stay informed: Follow credible news sources in the cryptocurrency space to stay updated on the latest developments surrounding the halving.

• Understand the risks: Bitcoin, like other cryptocurrencies, is a volatile asset. Be prepared for potential price fluctuations.

• Seek professional advice: Consider consulting a financial advisor who specializes in cryptocurrency investments.

By understanding the mechanics of the halving and approaching any investment with caution, you can navigate the ever-evolving world of Bitcoin with a well-informed perspective.

Newsletters - 3 times a week

Due to a limited amount of time, some business newsletter readers say that they would prefer fewer newsletters. At this experimental stage of the newsletters, we will try 3 newsletters next week. The newsletters will be on Monday, Wednesday and Friday.

This is just an experiment and we can go back to weekdays if people prefer. Let’s see how it goes and I await your feedback!

Do you have any Business English questions?

Please email me and I will do my best to answer them in future newsletters.

Until Monday - have a great day and a fantastic weekend!

Iain.

www.communicateenglish.com

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