Bitcoin Halving 2024: Everything You Need to Know IG International

What is Bitcoin Halving

It’s difficult to accurately predict what impact the next halving will have on the price of Bitcoin. However, each halving has been a major event in the history of the Bitcoin blockchain as it reduces the rate at which new coins are created, impacting both supply and demand. The halvings are anticipated to continue until at least the year 2140, when the last of Bitcoin’s fixed 21-million token supply is expected to be mined. When miners add new blocks to the blockchain by validating transactions, they receive newly created BTC for their efforts.

What is Bitcoin Halving

For example, BTC traded below $20k after the last event but soared to over $69,000 ten months later. Although there is no known official date yet, the next Bitcoin halving will likely occur sometime in 2024. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Does the Halving Affect Bitcoin’s Price?

Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. Any descriptions of products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation. Interestingly, Bitcoin halving is not mentioned directly in the Bitcoin white paper, as the term ‘halving’ is not used. However, the paper does discuss the limited supply of Bitcoin and the mechanisms in place to control the creation of new coins. Bitcoin has seen an increasing hashrate since its conception, meaning block times have come to average less than 10 minutes now. As these fluctuate, it is hard to predict the exact date of the next halving.

The digital asset exploded to an all-time high (ATH) of $69,000 after block rewards were reduced to 6.25 BTC in 2020. Even more importantly, the halving process ensures that the digital asset remains deflationary and valuable due to the limited number of block rewards miners receive for confirming transactions. Bitcoin was the first cryptocurrency and is the benchmark for all others, or altcoins.

Basics of the Bitcoin Network

“Historically, there is a lot of Bitcoin price volatility leading up to and after a halving event,” says Rob Chang, CEO of Gryphon Digital Mining, a privately held Bitcoin miner. “However, the price of Bitcoin typically ends up significantly higher a few months after. Higher prices would be an What is Bitcoin Halving incentive for miners to keep processing Bitcoin transactions. The halving policy was written into Bitcoin’s mining algorithm to counteract inflation by maintaining scarcity. In theory, the reduction in the pace of Bitcoin issuance means that the price will increase if demand remains the same.

As Bitcoin becomes a more legitimized and widely accepted store of value, it should steadily creep up on the total market cap of the popular precious metal. But even in our scenario, Bitcoin would only be worth 16% of gold, a penetration rate that might seem conservative to some bulls. And while it’s 62% off that peak right now, I believe that the world’s top cryptocurrency can reach $100,000 within the next five years.

Challenges Facing the Cryptocurrency Market

Bitcoin enthusiasts have even made halving parties a thing to celebrate each event. While halving has several positive consequences for the supply and price of BTC, each halving instance isn’t without its share of short-term challenges. NVT, or the Network Value to Transaction Ratio, is a metric that tells if the asset is in the oversold or overbought territory. Do note that NVT is a comparative ratio of BTC’s market cap and transaction volume.

  • Hash ribbons give a more conservative approach towards post-halving price rises as miners do take some time to get back into the mix.
  • For every 210,000 blocks, the number of newly issued bitcoins is cut in half.
  • The reward will just get smaller and smaller every time there is a halving if the practice continues.
  • Understanding how Bitcoin was meant to work as part of Satoshi Nakamoto’s vision is instrumental in gauging the importance of this seminal event.
  • Miners are incentivised to secure the network by spending resources (mining) and subsequently rewarded with bitcoins.