Investing.com-- Bitcoin price edged higher Friday, pushing close to record highs as hotter-than-expected U.S. inflation data positioned the world’s most popular cryptocurrency as a potential hedge against the diminishing purchasing power of traditional currencies.
Anticipation of the upcoming halving event, which will reduce the pace at which new Bitcoin is generated, also appears to be offering some support to the token.
At 03:00 ET (07:00 GMT), Bitcoin rose 0.3% to $70,965, not far removed from the $73,750 record high reached last month.
Bitcoin halving to have “sweeping implications”
The halving event is the main upcoming event in the sector, with the generation of block no. 840,000 on the Bitcoin blockchain widely expected to take place next week.
The event will halve the rate at which new Bitcoin is mined, tying into the narrative that the scarcity of the token will increase its value.
Analysts at JPMorgan said in a note this week that the halving event could have “sweeping implications” for the Bitcoin mining industry.
“All else equal, the halving will cut industry revenues in half, triggering a wave of consolidation and business closures, while (hopefully) rationalizing the network hashrate and industry capex, which is ultimately good for the remaining operators,” stated JPMorgan.
The investment bank estimates that industry-wide gross profits, currently about $2.5 billion per quarter, will decline 30% to 40%, with the network hashrate declining as much as 80 EH/s (or 13%) peak to trough.
Crypto price today: mixed trading after U.S. inflation data
Broader cryptocurrency prices have traded in a more mixed fashion Friday, as investors digested the latest U.S. inflation data.
World no.2 crypto Ethereum fell 1.4% to $3,536.1, Solana also dropped 0.2%, while XRP rose 1%.
The confusing U.S. inflation picture has resulted in traders picking favorites in the crypto universe, with the country’s producer price index coming in weaker than expected, in direct contrast to the hotter-than-expected consumer price index earlier in the week.
While the Federal Reserve potentially delaying cutting interest rates would not be beneficial to the crypto market, given that they usually benefit from a low-rate, high-liquidity environment due to their speculative nature, a surge in inflation could see the likes of Bitcoin sought after as a hedge against a weakening dollar.
Bitcoin has been considered a "safe haven" asset, much like gold, due to its finite supply and independence from the monetary policies of various governments.
Binance leads way with trading volume gains
The major centralized crypto exchanges have witnessed staggering growth in spot trading volume over the past month, fueled by the ongoing bull market.
A recently published report indicated that spot trading volume for March saw an average 134% increase over the figures for February, to $2.48 trillion. Meanwhile, the derivatives market volume witnessed a 47% gain month-over-month.
The most prominent trading platform, Binance, led the charge in terms of volume - recording a volume of almost $1.15 trillion in March, more than doubling the $479.95 billion recorded in February.
The $1.15 trillion volume Binance recorded is more than seven times the figure Coinbase (NASDAQ:COIN) witnessed.