The Bitcoin Halving 2024: What You Need to Know

3 mn read

The Bitcoin halving, a significant event in the cryptocurrency world, is fast approaching. Expected to occur in mid-April 2024, this event has the potential to greatly impact the Bitcoin ecosystem, affecting miners, investors, and the overall market. In this post, we’ll dive deep into what the Bitcoin halving is, its historical impact, and what to expect from the upcoming fourth halving.

What is the Bitcoin Halving?

The Bitcoin halving is a pre-programmed event that occurs approximately every four years, or every 210,000 blocks mined. During this event, the reward given to Bitcoin miners for verifying transactions is cut in half. This mechanism was put in place by Bitcoin’s creator, Satoshi Nakamoto, to control the supply of new Bitcoins entering circulation, thus managing inflation.

Historical Impact of Bitcoin Halvings

Let’s take a look at how previous Bitcoin halvings have impacted the market:

how previous Bitcoin halvings have impacted the market:
how previous Bitcoin halvings have impacted the market:
  • First Halving (November 28, 2012): Bitcoin’s price surged from around $12 in November 2012 to over $1,000 by November 2013.
  • Second Halving (July 9, 2016): Bitcoin’s price increased from approximately $650 in July 2016 to around $2,500 in July 2017, eventually hitting a then all-time high of $19,700 in December 2017.
  • Third Halving (May 11, 2020): Bitcoin’s price moved upwards from around $8,000 in May 2020 to a new all-time high of over $69,000 in April 2021.

These trends suggest that Bitcoin’s price tends to increase significantly within a year after each halving, followed by a price correction period.

Supply and Demand Dynamics

The halving directly impacts Bitcoin’s supply by reducing the rate at which new Bitcoins are created. Coupled with steady or increasing demand, especially from institutional investors, this can lead to a supply squeeze, pushing prices upwards.

age distribution of all bitcoin in circulation
age distribution of all bitcoin in circulation

The chart above shows that the percentage of Bitcoin held by long-term investors (holding for more than 3 years) has consistently increased after each halving. This suggests that the halving encourages holding behavior, further reducing the available supply on exchanges.

The Fourth Halving: What’s Different?

The upcoming fourth halving, expected in April 2024, is unique due to the increased institutional involvement in the Bitcoin market since the last halving. The introduction of Bitcoin ETFs and the growing percentage of Bitcoin held by institutional investors could amplify the impact of the halving.

chart showing the percentage of Bitcoin held by institutions over time
chart showing the percentage of Bitcoin held by institutions over time

As institutions now hold a significant portion of circulating Bitcoin, the combination of reduced mining rewards and increased institutional buying could lead to a more pronounced supply shock compared to previous halvings.

Conclusion

The Bitcoin halving is a key event that has historically been followed by significant price increases. However, the crypto market has matured significantly since the last halving, with increased institutional participation. This could make the upcoming fourth halving even more impactful. As always, it’s essential to keep a close eye on market trends and adapt your strategies accordingly. The halving is just one piece of the puzzle in Bitcoin’s ongoing evolution and its journey towards mainstream adoption.

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