Unpacking the Impact of Bitcoin Halving on the Crypto Market: Benefits and Limitations

Abstract

Bitcoin halving events have become pivotal moments in the cryptocurrency market, generating widespread anticipation and speculation among investors, miners, and enthusiasts. Understanding the impact of these halving events requires a nuanced examination of their effects on supply dynamics, market sentiment, and the broader crypto ecosystem. Bitcoin halving events, while not directly affecting NFTs (Non-Fungible Tokens) and the metaverse, can have a notable impact on these ecosystems through interconnected market dynamics and investor sentiment. The relationship between Bitcoin, as the flagship cryptocurrency, and the broader crypto market often influences trends in specific sectors, including NFTs and the metaverse. As Bitcoin undergoes halving, the reduction in block rewards tends to generate heightened interest and speculation in the cryptocurrency space. This positive sentiment can create a favorable environment for various crypto assets, including those within the NFT and metaverse realms. Present research has focused on all these aspects.

An Empirical Examination of Bitcoin’s Halving Effects: Assessing Cryptocurrency Sustainability within the Landscape of Financial Technologies

“…The phenomenon of Bitcoin halving has been a subject of extensive research and analysis within the cryptocurrency community, attracting the attention of scholars, economists, and market analysts. Several studies (binance 2024; bitpanda 2024; Chan et al 2023;Chaturved 2024;Coinbase 2024;CoinDCX 2024;Conway 2024;Crawley 2020;Cuthbertson 2024;El Mahdy 2021;ET Spotlight Team 2024;Howcroft and Wilkes 2024;Kuhn 2024;Masters 2019;M'bakob 2024;Meynkhard 2019;Pan et al 2020;Patel 2021;Ramadhani 2022;Samizadeh 2024aSamizadeh , 2024bSchär 2020;Singla et al 2023;Valamontes 2024;Whittaker 2024;ig 2024;Zhao 2024) have explored the implications of halving events on the supply dynamics, price stability, and market sentiment of Bitcoin. Conway (Conway 2024) and many other experts (Coinbase 2024;CoinDCX 2024;Cuthbertson 2024;ET Spotlight Team 2024;Jahanshahloo et al 2023;Meynkhard 2019;Schär 2020) emphasise that the Bitcoin halving is when Bitcoin's mining reward splits in half.…”

“…Some authors have focused on the price of the Bitcoin and analysis of financial bubbles (Agosto and Cafferata 2020;Azamjon et al 2016;Gibbons 2018, 2019;Butek 2016;Deutsch 2018;Fantazzini and Kolodin 2020;John et al 2022;Kiffer and Rajaraman 2021;M'bakob 2024;Phiri 2022;Prasad 2022;Riposo 2023;Sedlmeir et al 2020;Wu and Hossain 2023), and others on the prediction of future developments (Cuthbertson 2024;Katanich 2024). Some researchers' works compare the development not only of Bitcoin but also of other cryptocurrencies (Albrecher et al 2022;Bakhtiar et al 2023;Cengiz 2021;Gkillas and Longin 2019;Katanich 2024;Kawaguchi and Noda 2022;Lucking et al 2019;Rashid et al 2023;Sen and Jena 2022;Singla et al 2023;Touloupou et al 2022;Trucíos and Taylor 2023;Vaddadi et al 2023;Yuan et al 2022). A different point of view was used in other works (Bâra and Oprea 2024;Eksi and Schreitl 2022;Hayes 2015;Lasi and Saul 2020;Samizadeh 2024a;Jiménez et al 2024), with use of models to analyse and predict the market and price changes.…”