Halving is when the BTC rewards per block are reduced to 50%, leading to a price change in BTC which is especially notable for traders. This also means there could be a decrease in the supply of new coins. It’s also likely to affect the efficiency of mining operations.
The latest bitcoin news predicts that the next halving is expected to occur in April 2024. The number of blocks would have hit 740,000 and the reward would fall from 6.25 to 3.125. The exact date of the halving hasn’t been released yet as the time it takes to generate new blocks varies with network average.
Bitcoin halving is scheduled to occur once every 210,000 blocks in an estimated four year cycle and will continue to happen until the network generates the maximum supply of 21 million Bitcoins.
Bitcoin halving is essential for traders as it reduces the number of new Bitcoins the network can generate. This also means limits in the supply of new coins result in increased demand and remain strong. Bitcoin has appreciated from past halvings, however BTC News reveals that this isn’t always the case as circumstances surrounding a halving differ. The demand is also unpredictable and can fluctuate significantly.
The History of Bitcoin Halving
So far, there have been three Bitcoin halvings: one in 2012, the next in 2016, and the last in 2020.
On November 28th, 2012, the price of Bitcoin was around $12. When the first halving took place, the price was close to $1,000. The next halving happened on the 9th of July 2016, when the Bitcoin price fell to $670. It later rose again in July 2017 to $2,550 per Bitcoin. BTC News states that in December 2017, the price reached an all-time high of $19,700. The third halving, which happened in May 2020, when Bitcoin was at $8,787, took prices to an all-time high of $69,000 by November 2021.
Reasons for Bitcoin Halving
Bitcoin halving happens as part of a protocol and is a key mechanism that controls the supply of any new coins coming into circulation. Here are the key reasons for halving:
To Control Inflation
The Bitcoin ecosystem may be controlled by inflation and halving helps limit any excess fluctuation. Lowering the block reward means that new Bitcoins entering the market have decreased value which assists in keeping the coins stable while increasing value in the long term.
The Impact on Bitcoin Price
Prices in Bitcoin seem to rise during halving events and an increase in the price has been directly linked to this halving process. Price appreciation due to halving has resulted in an expected decrease in supply, while demand rises. The trend has been ongoing with past halvings but it’s important to note that the next halving isn’t guaranteed to be the same.
It Controls Supply and Scarcity
Halving reduces mining rewards and decreases the rate at which a new Bitcoin is generated. This means supply can be managed and constrained with scarcity encouraging high value for the deflationary asset.
Economics and Market Forces
The halving event causes economic changes for the broader market, especially for Bitcoin miners. During a halving event, miners must modify operations to remain profitable within a lower block reward, increasing competition and driving away unproductive miners.
The Importance of Bitcoin Halving
Bitcoin halving has resulted in the following events:
- An increased use of the currency in the real world
- More coverage from the press for Bitcoin and other cryptocurrencies
- An increased fascination with the anonymity of the digital currency
- Increased volatility due to a decreased supply of Bitcoin, raising the value of Bitcoin for mining, making it an attractive investment
- A reduction in unproductive miners
In the past, halving has become a pattern that many investors and Bitcoin owners look forward to.
Does Halving Affect BTC Price?
Based on positive past results, the price of Bitcoin is likely to continue fluctuating. These changes can be difficult to predict as the exact impact of halving is determined by the Bitcoin market. With all halving events, the expectation is that BTC prices should increase due to the decreased supply of coins. The uncertainty inherent to Bitcoin halving occurrences is another factor that makes it difficult to make accurate predictions.
When will 21 Million Bitcoins be Reached?
Based on the current trajectory of Bitcoin halving events, it is predicted that 100% of Bitcoin will be mined by 2041, with 98% already in supply by 2032. Note that these aren’t guaranteed results, just predictions, as the Bitcoin market is highly volatile and difficult to determine.
Carolyn Coley is a blockchain reporter. She joined Smartereum after graduating from UC Berkeley in 2018.
