How Will Altcoins Perform Post-Bitcoin Halving Event? Here’s What To Expect
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The Bitcoin halving, scheduled for April 20, is set to mark a turning point for altcoins too. In previous halvings, Bitcoin’s influence usually declined over the next few months. This decrease in Bitcoin’s market control often triggered more money flowing into other coins. Many of these altcoins have recently reached new highs in 2024 following Bitcoin’s ATH and are set to surpass their previous peaks following the Bitcoin halving event. Here’s a look at what exactly might happen to these altcoins after the upcoming Bitcoin halving.
Altcoins Might Take Few Months To Skyrocket
As Bitcoin’s price rises after the halving, this increase often motivates investors to put their money and focus in altcoins, bringing a fresh wave of investment.
This influx of new capital usually leads to a temporary boost in the value of altcoins and increases market volatility. Looking back, especially after Bitcoin’s second and third halvings, there’s a noticeable change in the market where altcoins tend to perform better compared to Bitcoin. In the six to twelve months after a halving, as Bitcoin’s price stabilizes at new highs and may even increase, interest in the market often moves towards altcoins.
This shift, along with the historical decrease in Bitcoin’s dominance after a halving, typically triggers a surge in altcoins, signaling a time of peak performance for the altcoin market following the Bitcoin halving event.
If the computing power used in Bitcoin mining goes up, the mining difficulty will increase to balance it out, making it tougher to mine Bitcoin. This means miners will need to reconsider if it’s still profitable for them.
When this happens, some of the money invested in Bitcoin might shift to altcoins. This could be because miners are diversifying their investments as it becomes easier to make a profit following a difficulty adjustment, or because they’re looking for higher returns by putting their resources into the altcoin market. This can boost demand for altcoins after halving event and push their prices up in the following months.
Altcoin Performance Post-Halving
The last three times Bitcoin halved, its market dominance fell significantly, while the market capitalization of altcoins surged in the months after the mining difficulty adjusted.
For example, after the second Bitcoin halving on July 9, 2016, Bitcoin’s share of the total cryptocurrency market dropped from 98.33% to below 40% within 18 months. During the same period, the value of altcoins increased by over $286.5 billion.
A similar trend was observed after the third Bitcoin halving on May 11, 2020. Within a year following this halving, Bitcoin’s share of the total market value dropped from 66.43% to 40%. Meanwhile, the market capitalization of altcoins soared from $90.11 billion to $1.229 trillion.
As of April 12, 2024, the market capitalization of altcoins stands at $1.13 trillion, with Bitcoin halving just around the corner. We’re now in a similar pre-halving phase as we saw in 2016 and 2020, which led to increases in the altcoin market cap following the Bitcoin halving. Given that the effects of the halving on altcoins have lasted more than a year in the past, we might see similar growth in the altcoin market once again, taking the market cap above $3 trillion by 2025.
Filed under: Bitcoin - @ April 12, 2024 8:07 pm