On April 19 2024, the Bitcoin halving event took place, cutting the block reward for miners in half from 6.25 BTC to 3.125 BTC per block. The event expected miners to have lower minting fees and the bitcoin prices to become more volatile, and it was thought to have implications for both traders and investors. The decrease in bitcoin’s circulation due to the halving expected to create the scarcity that can influence bitcoins’ long-term path and the wider cryptocurrency market, a rather uncanny phenomenon took place. While there wasn’t an impact on investors and markets, there was an unexpected turn of events for Bitcoin miners. The global launch of Casey Rodarmor’s new Runes protocol, simultaneous with halving, allowed the digital token minting on Bitcoin’s blockchain to continue, causing a surge in network congestion. This led to transaction fees skyrocketing to all time highs and bringing riches to Bitcoin miners like never before.
According to a report by Coindesk, the average transaction fees for Bitcoin soared to an all-time high of $127.97 on April 20, coinciding with the halving event and the launch of Runes. It has been a rare phenomenon that took place and has been estimated to be nearly twice as much as the previous record set three years ago.
However, the PYMNTS has a different point of view from Coindesk’s report, which suggests that miners are facing challenges due to the impact of ‘halving induced volatility’. This situation arises as miners experience a reduction in rewards coupled with doubling their break point.
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Despite this, miners are choosing to accumulate bitcoin to navigate the effects of reduced rewards for validating transactions even though investors seek gains from this market behaviour. Previous instances of halving in 2012, 2016 and 2020 led to price increases for bitcoin at rates of 93 times, 30 times and 8 times. However, concerns have been raised by Goldman Sachs as well regarding whether the current halving cycle will be able to yield results, leaving investors hooked on to the market in anticipation.
Further, Bitcoin recently dropped to $59,900 for the time in a month but has had a slower price increase, rising to $61,000. Analysts worldwide anticipate that this event could majorly impact bitcoin’s position in the market due to supply constraints. However, there are reasons investors could maximize their profits, and miners may not have to worry as much.
Is Runes Protocol The Deciding Factor?
The Runes Protocol has given Bitcoin miners a sense of security that was not expected previously. This protocol is said to bring about amendments in the Bitcoin ecosystem, which has been awaited for some time now. There have been talks about introducing a standard for tokens in the Bitcoin ecosystem. This is good news as fungible tokens can be exchanged on a one-on-one basis and are believed to boost activity within the ecosystem, driving up traffic. The launch of Runes has also notably improved transaction fees for Bitcoin, which reached a record high two days ago. This hints at the possibility that Runes might be implementing strategies to drive up transaction demand or alter fee calculations within the Bitcoin chain has been in the know. However, no official updates have been provided as of now. While this may benefit miners in the short run, assessing its long term impact on Bitcoin remains challenging without any official update.
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On the other hand, PYMNTs claim of Bitcoin prices falling has no factual basis, as a slight dip in the market has often been noted historically before Bitcoin’s halving. It is hard to decode investor psychology when it comes to Bitcoin and, hence, difficult to decipher the current market sentiment. However, in the past, Bitcoin has seen price hikes following its halvings. After the 2012 and 2016 halvings, Bitcoin price saw increases in the months and years that followed. This leaves room for speculation that the halving would probably lead to increased demand and a rise in price. While past performance doesn’t guarantee results of the historical trend of price surges post-halvings, it has fostered some optimism, and one would have to wait to see.
