Binance Founder’s Analysis: Why Bitcoin Halving Doesn’t Mirror a Stock Split

  • Binance founder Changpeng Zhao has cleared his followers on the differences between Bitcoin halving and stock split.
  • This message is crucial as the next Bitcoin halving event is less than 24 hours away.

Changpeng ‘CZ’ Zhao, founder of Binance Holdings Ltd has proclaimed that Bitcoin halving cannot be likened to a stock split. In a Tuesday post on social media X, Zhao stated

“Someone asked me if bitcoin halving is like a stock split… We are still early. (Answer is no). Happy halving.”

Bitcoin Halving Explained

Throwing more light on the Bitcoin halving event, Zhao shared an earlier post dated October 2023. While he acknowledged at the time that it was hard to forecast the future, he did note that based on previous experiences, there was usually greater discussion, news, hype, and anticipation about Bitcoin in the months leading up to the event.

He, however, mentioned that Bitcoin’s price will not skyrocket a day after the event. This move, according to him, will lead to questions from investors on the reasons behind the negative outcome. Nonetheless, the Binance founder stated that Bitcoin would record multiple record All-Time Highs (ATHs) in the year after the halving event.

For those wondering why the price of Bitcoin would only pick up after the event, Zhao explained that while there may not be a proven link between halving events and price changes, history can not always predict the future.

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Simply explained, Bitcoin halving is a pre-programmed mechanism that occurs approximately every four years. From its inception, Bitcoin was designed by its creator Satoshi Nakamoto to have a capped supply of 21 million coins. Nakamoto wrote the halving into Bitcoin’s code and it operates by reducing the rate at which new Bitcoin units are released into circulation. 

Currently, Bitcoin’s circulating supply is 19,700,000. Miners use computing power to solve complex mathematical puzzles to validate transactions in a bid to add them a block and earn rewards in the form of new Bitcoin. The blockchain is constructed so that a halving occurs every 210,000 blocks added to the chain, which happens around every four years.

At the halving, the quantity of Bitcoin available as rewards for miners is reduced by half. This technically reduces mining profitability and hinders the production of new Bitcoin. As Crypto News Flash had earlier detailed, the next halving event, the fourth of its kind, is anticipated for about April 20, 2024. This event will reduce Bitcoin miners’ rewards from 6.25 BTC to 3.125 BTC.

In summary, as Bitcoin supply decreases and demand increases, it is anticipated that Bitcoin’s price will surge substantially. In contrast to Bitcoin halving, a stock split occurs when a corporation divides and raises the number of shares available for purchase and sale on an exchange. A stock split decreases the stock price but does not reduce the value to present shareholders. It raises the number of shares and may persuade prospective buyers to make a purchase. 

Concerns Raised on Upcoming Bitcoin Halving

Amid optimism for the upcoming Bitcoin halving event, Banking giant Goldman Sachs warned investors that the event could fall short of expected returns. As previously reported by Crypto News Flash, the firm reveals that prior bullish trends were driven not only by the halving but also by other macroeconomic variables.

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At the time of writing, Bitcoin is trading at $64,808, up by 5% in the past day, with its trading volume pegged at $50.6 billion. 

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