The upcoming Bitcoin halving has the potential to reshape the digital asset industry as the four-year cyclical event restricts the influx of new Bitcoin, supports long-term price appreciation and drives institutional interest in the world's largest crypto currency, according to Gulf Binance.
As the halving, which is expected later this month, restricts the inflow of new Bitcoin, market volatility is likely based on the ongoing interplay between supply and demand, said Nirun Fuwattananukul, chief executive of the joint venture between Binance and Thailand's Gulf Energy Development.
"The digital asset community eagerly anticipates this phenomenon because of its potential to significantly impact the market. Four years ago, discussions around the halving were relatively limited," he said.
"However, the current widespread media attention is a clear indicator of Bitcoin's growing acceptance by the mainstream."
Roughly every four years, a programmed mechanism cuts the block reward for miners in half.
This ensures a controlled and scarce supply of Bitcoin, contrasting sharply with the inflationary nature of traditional fiat currencies.
Bitcoin's deflationary characteristic positions it as a distinct asset class, offering potential value as both an alternative investment and a long-term store of value, said Mr Nirun.
The resulting scarcity could lead to long-term price appreciation for Bitcoin, solidifying its position as a compelling alternative investment, he said.
While miners could see their revenue fall initially based on the lower block reward, the potential value increase of Bitcoin could ultimately mitigate these concerns, said Mr Nirun.
Moreover, the halving might act as a catalyst for increased institutional interest, particularly with the rise of Bitcoin exchange-traded funds (ETFs), he said.
This event could also fuel innovation in the blockchain ecosystem, potentially accelerating the development of protocols, leading to further exploration of the technology's capabilities, said Mr Nirun.
According to Piriya Sambandaraksa, a cryptocurrency and blockchain technology specialist, Bitcoin halving affects the supply, which is capped at 21 million coins, and slows the pace at which Bitcoin is generated.
"With every four-year cycle, more retail investors enter the market and push the price higher than it should be," he said.
"This time it might be different if institutional investors enter the market, with the emergence of spot Bitcoin ETFs resulting in a new record-high price before the halving."
Investing in Bitcoin requires knowledge, understanding and discipline to survive, said Mr Piriya, founder and managing director at investment education website Chaloke Dot Com.
According to Bitkub Online, the next Bitcoin halving is expected around April 27, 2024, with the reward decreasing from $6.25 to $3.125.
Based on the halving, it is expected that all 21 million Bitcoins will be mined by 2140, according to analysts.