Is Bitcoin Halving a Bullish or Bearish Indicator for Investors?

Bitcoin Halving 2024: Analyzing the Bitcoin Halving Process

Even though Bitcoin is a digital currency, it can't be created infinitely. The core of any cryptocurrency is its limited supply and endless demand; this is what drives Bitcoin price, and to limit the supply of Bitcoin, the event called Bitcoin halving was made. There is more to know about the Bitcoin halving process and how Bitcoin having 2024 will impact its prices. We have covered it all for you if you want to learn more about the process.

Key Highlights

  • Bitcoin halving event occur when the reward for mining Bitcoin transactions is reduced in half.

  • Bitcoin halving events occur every four years according to pre-set rules in the Bitcoin code.

  • The first Bitcoin halving event occurred in 2012. The last halving event occurred in 2022; the final event will occur in 2140.

What is the Bitcoin Halving Process?

Bitcoin Halving is the most awaited event of 2024, also known as "the Halvening." Bitcoin halving is an event where the miners receive a reward for mining a new block is reduced to halved. It means miners receive 50% less Bitcoins for every transaction. Bitcoin halving occurs when every 210,000 blocks are mined, which occurs every four years. 

It is an important event for traders because it reduces the number of new bitcoins generated by the network. This means it limits the supply of new coins, increasing Bitcoin's price even when demand remains the same. The price of Bitcoin fluctuates before and after the halving process, which many times causes the price to appreciate rapidly.

How does the Bitcoin halving Process work?

If we explain how Bitcoin halving works, a block or a file contains one megabyte of Bitcoin transaction recorded on the blockchain. Here, miners compete with each other to add the next block by deciphering a complex mathematical problem. They produce a random 64-character output known as "hash", finish the process, and lock the block so it can't be changed. When the minors complete this block, they will receive a Bitcoin.  

Initially, miners were paid 50 Bitcoins per block when Bitcoin was established. Users were enticed to mine the network as they knew how successful it would be. Now, the rate at which new Bitcoin is created decreases by half when 210,000 blocks are mined, which occurs every four years. The first Bitcoin split occurred in 2012 when minors reduced the block from 50 to 25 BTC.

Exploring the History of Bitcoin Halving Dates

On November 28, 2012, the first Bitcoin halving event took place when the price of Bitcoin was around $12. After this event, the price rose to nearly $1,000. When the second halving event occurred on July 9, 2016, the Bitcoin price was around $670, but by July 2017, it had gone to $2,550. In 2017, Bitcoin reached its all-time high at about $19,700. Again, in May 2020, the price dropped to $8,787, and by November 2021, the price rose and reached a new all-time high of $69,000.

Bitcoin halving means it's a deflationary event. If you look at Bitcoin inflation, it was 50% in 2011; after the halving in 2012, it reduced to 12%; in 2016, it was around 4 to 5%. Currently, Bitcoin has a 1.74% inflation rate. After each halving, the value of Bitcoin increases, and every halving event has historically made a bull run for Bitcoin. As the supply decreases, the price rises, which causes demand to rise; however, it is usually not immediate.

Another reason for the price rise is it requires a high cost of electricity for miners to power the computer that solves the mathematical puzzles. It means the price of BTC must rise significantly for miners to receive half as many coins. Also, if the price increases, it will be easier for miners to stay competitive.

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When Is the Next Bitcoin Halving in 2024?

So far, 89% of the 21 million Bitcoins that can ever exist have been created and mined. Now, about 19 million Bitcoins are in circulation. Approximately 900 new Bitcoins are mined and added to the digital supply daily. The Bitcoin halving is a continuous process, and the supply of Bitcoin will gradually decrease until all 21 million Bitcoins are mined. The final fraction of Bitcoin is expected to be mined by 2140. 

The exact date is still being determined if we look at the next halving event. Still, it is calculated that after mining the 840,000 blocks since the last halving, it might occur in April 2024. If you look at the mining process, a new Bitcoin is mined approximately every 10 minutes, and this calculation makes us predict that the next halving will occur around April 24, 2024. This event will reduce the mining reward for each block to 3.125 Bitcoin.

It again implies that mining rewards are lowered after every halving event. This means miners are now facing more competition for every small reward, and the dynamics of the Bitcoin mining environment are continuously changing.

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What Happens During a Bitcoin Halving Process?

If you look at the last halving event on May 11, 2020, the mining rewards were reduced to 50%. It fell from 12.5 new Bitcoin per block to 6.25 Bitcoin. It limited the supply of Bitcoin, which triggered a bullish scenario for the token, where the prices increased from $6877.62 in April to $8821 after this event. The token experienced significant volatility. Still, the price continued to rise for the next year, reaching $49,504 on May 11, 2021. 

Similar patterns occurred in the previous halving event in 2012 and 2016, where the token saw the most substantial upside after the event; however, there was a significant drop in its value later, but the price remained much higher than before the halving event.

What Happens to Bitcoin Prices During Halving Events?

If you look at Bitcoin's halving history, the price of Bitcoin has increased. It happened because the reduced rate of new Bitcoin creation caused the coin's scarcity, potentially increasing the demand and raising its prices. It is also essential to understand that various factors greatly influence market dynamics, and the price movement can be complicated. If we take the previous approach that Bitcoin halving has increased the token prices, this time, it may or may not happen simply because the circumstances surrounding these events are different from what they were during the previous halving events. The other reason is the markets are now more mature than they were in 2020. Also, there are now more established cryptocurrencies that are competing for the users

What will happen when there are no more Bitcoins left?

The Bitcoin halving event proves that the time will come when there will be no Bitcoin left for further halving, and this might occur somewhere around 2140. It means there will be no BTC left, and it will not be created any further. When the last Bitcoin is mined, there will be no Bitcoin available for miners to mine, and they will receive no rewards for adding blocks to the blockchain. But it doesn't mean that miners will have no work available. They will continue to verify transactions and maintain the integrity of the Bitcoin network even after the post-mining era. To verify transactions and maintain integrity, they will receive the transaction fees and work to keep the network going.

On the other hand, the end of Bitcoin mining doesn't mean there will be no Bitcoin available. It will begin a new phase where the role of minors will transition, and the market will adapt to a fixed supply of the token. This milestone is achieved in 2140.

What happens during a Bitcoin halving?

When the Bitcoin is halved, the reward for mining a new block on the blockchain is reduced by 50%. It means miners now receive your Bitcoins for completing one block. It is an important event because it reduces the rate at which new Bitcoins are created. It means it reduces the supply of Bitcoin in the market, which increases its value.

Is Bitcoin Halving a Bullish or Bearish Signal?

If you look at the past three halving events, we have witnessed a bullish trend in the price of Bitcoin. But the upcoming event doesn't guarantee the same scenario to occur. However, let's analyze the reason behind the increase in the price. It is the law of supply and demand as the supply is reduced and demand remains unchanged. The halving of Bitcoin reduces the supply of new Bitcoin entering the market, and the demand stays the same or increases. This resulted in a price increase. However, other factors like market sentiments and economic conditions play an important role in determining the price of the token.

Conclusion

Bitcoin halving 2024 prediction are a fresh point of interest because 2024 is here, and the major event in the crypto world will happen sooner. The Bitcoin halving is what every trader and investor is waiting for. If you have questions about Bitcoin halving, we have covered it all. Wait for the Halvening and see how it will drive the price of the most loved token- Bitcoin.

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Noah Willaims 02 Jan, 2024

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