Bitcoin continues to outperform, with improving network activity and a positive outlook as the countdown to the halving begins. With the Bitcoin halving expected to happen just about a year from now, investors and traders are analyzing its potential impact.
According to IntoTheBlock’s weekly newsletter, Bitcoin network fees are on the rise again, as the number of daily transactions hit a six-year high. Meanwhile, Ethereum fees dropped slightly, especially in the second half of the week, as new coin meme trading eased. Additionally, more than $1 billion worth of Bitcoin moved to centralized exchanges this week, while $735 million worth of ETH left CEXs as staking continued to shift to non-optional options.
Bitcoin is off to a strong start in 2023, with a 78% year-to-date price increase and improved network activity. The long-awaited Bitcoin halving is now only about a year away, providing a boost to event traders and fundamental investors alike. Many claim Bitcoin’s 4-year reward halving is the main catalyst for the cryptocurrency bull cycle. By April 2024, the number of BTC rewarded to miners for each block dug will be reduced from 6.25 to 3.125, roughly equivalent to the bull market since the first half of the year.
The bullish consensus surrounding the halving may be more important to price than the actual reduction in issuance, as miner rewards currently account for only 0.1% of daily Bitcoin transaction volume. Psychologically, many investors have now linked this event to Bitcoin’s rise, and there is reason to believe that people will try to predict the plot. This pattern may have already started, as reflected by the increase in search volume at the beginning of the year.
Litecoin, a fork of Bitcoin known as “digital silver,” is also preparing for the upcoming halving, which may provide interesting insights into what happens after the 2024 halving. bitcoin. If history repeats itself, the bitcoin halving could attract more interest from speculators. Alternatively, improving fundamentals may also attract investors.
Bitcoin’s daily transaction volume will grow by more than 60% in 2023, accelerating shortly after the introduction of Inscription as an NFT BTC. An increase in daily transaction volume indicates increased active usage of the Bitcoin blockchain, which also helps reduce miners’ reliance on block rewards. However, as the number of bitcoins rewarded to miners decreases, they theoretically have no incentive to contribute resources to validating the network.
For Bitcoin’s security to be sustainable in the long run, transaction fees should represent a higher percentage of the rewards miners receive. Throughout 2022, Bitcoin transaction fees will only account for 1.61% of Bitcoin miners’ income. That figure has increased by an average of 2.76% over the past week, reaching the highest level since July 2021. Increases in transaction fees are improving Bitcoin’s security prospects by reducing its reliance on miners’ block rewards.
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according to Kyptos
