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Changpeng Zhao, the former CEO of Binance, recently clarified that Bitcoin (CRYPTO: BTC) halving is not akin to a stock split, emphasizing the nascent stage of cryptocurrency understanding.
What Happened: On Friday, Changpeng Zhao took to X, formerly Twitter, to address a question about Bitcoin halving. He stated, “Someone asked me if bitcoin halving is like a stock split… We are still early. (Answer is no) Happy halving!”
Zhao, shared his earlier thoughts on halving dated Oct. 9, 2023. The Binance founder reflected on Bitcoin halvings based on his past experiences with the event.
He said that in the months leading up to the halving, there was typically increased discussion, news coverage, anxiety, and anticipation surrounding Bitcoin.
However, immediately after the halving, the price of Bitcoin didn’t skyrocket overnight. Despite this, in the year following the halving, Bitcoin’s price often reached multiple all-time highs, prompting people to wonder about the reasons behind it. Zhao emphasized that while there may not be proven causation between halvings and price movements, history doesn’t necessarily predict the future.
Why It Matters: Bitcoin halving is a pre-programmed mechanism that fundamentally impacts the economics of mining and potentially shapes the future price and ecosystem of Bitcoin. The upcoming halving event, the fourth of its kind, is scheduled for around April 20, 2024. This event will slash Bitcoin miner rewards from 6.25 BTC to 3.125 BTC.
Contrary to a stock split, which increases the number of shares of a company without changing its market capitalization, Bitcoin halving reduces the rate at which new tokens are created, effectively limiting the cryptocurrency’s supply. This fundamental difference underlines Zhao’s clarification and the importance of understanding the unique dynamics of cryptocurrency.
Price Action: At the time of writing, Bitcoin traded 1.2% higher at $61,961.16, according to Benzinga Pro data.
Photo Courtesy: Wikimedia Commons
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Posted In: $BTC
