What is the Bitcoin halving 2024?

The Bitcoin Halving is one of the biggest events in the cryptocurrency calendar but the halving in 2024 has the potential to be the most important yet.

In fact, many analysts are pegging their hopes on the 2024 halving to kickstart the next bull run. Let’s learn how halvings have an impact on Bitcoin’s price and are central to understanding how the industry responds to external influences.

What is a Bitcoin Halving?

A Bitcoin Halving is an event in which the reward for creating new Bitcoin tokens is cut in half. Let’s dig into how this happens.

Bitcoin is created by mining, in which powerful computers crack complex mathematical puzzles and upload transaction data to the blockchain. Each chunk of data is uploaded in a block.

Miners are rewarded for doing this work with new Bitcoin, something known as the Bitcoin issuance rate.

Every 210,000 blocks, roughly every four years, a halving happens. The reward received by miners is slashed by 50 percent.

Halvings are important because they change the issuance rate at which new Bitcoin tokens enter the market, as well as affect the financial incentives of those responsible for maintaining the network.

When is the next halving?

It’s hard to put an exact date on when the next halving will be because it only happens once the 840,000th block is completed.

But, considering one block is added to the network every ten minutes, it’s generally agreed this will take place between April and May 2024.

After this, the reward will be cut from 6.25 to 3.125 Bitcoin for every block added to the blockchain.

Does the Bitcoin halving affect the price?

Every Bitcoin halving has had a strong effect on the Bitcoin price. There are two reasons for this.

The first is that the rewards are halved for miners, a process that promotes the sustainable growth of the network until the cap of 21 million tokens is reached.

The second is that the inflation rate decreases after each halving, because the rate at which new Bitcoin are introduced into the market is slashed each time.

This factor comes down to simple supply and demand, in which there will be fewer Bitcoin tokens available to purchase, but with growing demand. This indicates that the price will increase over time.

The halving is also a central part of Bitcoin’s regular price behaviour. Even though it seems chaotic, Bitcoin actually has a cyclical price pattern.

The cycle is made of roughly two years of rising prices leading up to the halving. This is followed by a year of sustained high prices. These stages are known as bull markets, in which price action is positive. This then leads into a year of low prices, known as a bear market.

Every halving in the history of the cryptocurrency has preceded a bull market for Bitcoin.

Bitcoin Rainbow Chart

Why is the 2024 Bitcoin halving important?

2022 was a catastrophic year for cryptocurrency. Prices plummeted from all-time-highs and several multi-billion implosions took place within months of each other. A brutal bear market ensued and, since then, all eyes have been fixed on the Bitcoin halving as the North Star for the industry’s recovery.

This halving is particularly important because of the extraordinary circumstances that the industry finds itself in. Since the last halving, there’s been a global pandemic, record inflation, war, hostile regulation and the decimation of some of the biggest companies in the industry.

Bullish analysts think that the price cycle will still hold and that Bitcoin could soar to new all-time-highs in the ensuing bull run.

More pessimistic commentators think that the macroeconomic climate is so bad that it will delay or even override Bitcoin’s inherent price cycles this time around.

Bitcoin Halving 2024 price prediction

Every halving to date has had a positive impact on Bitcoin.

Here’s how Bitcoin behaved in the year leading up to each halving:

Halving 1, 2012: +385% and 5,089% in the year after.
Halving 2, 2016: +142% and 284% in the year after
Halving 3, 2020: +17% and 559% in the year after

While a look back at Bitcoin’s previous price action shows that each halving has had a strong positive influence on the asset’s value, this is by no means a guarantee that this next halving will do the same. One of the key tenets for all investors to remember is that past performance does not guarantee the same results in the future. Nonetheless, many analysts believe that this could happen due to the effect on Bitcoin supply and demand.

Bitcoin's Halving Timeline — Source: Coin Metrics

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