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The Bitcoin Halving Unveiled: Key Highlights and Insights

Delving into the Bitcoin halving and it's impact

Crypto terminology. The ultimate 2024 guide
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Published in: One Trading · 5 min read


The Bitcoin halving is a significant event in the cryptocurrency world, which occurs every four years. This event captures the attention of crypto enthusiasts, investors, and financial experts worldwide. In this blog post, we will provide an in-depth exploration of the Bitcoin halving, including quotes from well-known Bitcoin advocates.

1. What is the Bitcoin halving?

Bitcoin (BTC) halving is an event that takes place on the Bitcoin network approximately every four years. In this process, the amount of new bitcoins created and released into circulation is cut in half. The main purpose of this process is to control the supply of Bitcoin, keeping it steady over time. As a result, it helps maintain its value by preventing inflation from occurring when prices rise too quickly. Halving also has implications for bitcoin miners as fewer mining rewards mean increased competition and lower profits. Halving helps both investors and miners alike by helping to keep Bitcoin a stable and reliable investment option in the long term.

2. Bitcoin halving cycles

The process of the 4-year cycle mechanism is that it decreases the rate at which new Bitcoins are created, ensuring a steady supply in circulation. Bitcoin halving schedule is set to four years and occurs every 210,000 blocks, the reward for mining new blocks is cut in half, from 50 to 25 to 12.5 and so on.

Halving cycles are designed to keep inflation low and maintain the value of Bitcoin over time. This helps ensure that miners have incentive to continue supporting the network, and helps protect against market manipulation or hoarders accumulating more than their fair share of coins.

(Source: Smart Valour)

3. Bitcoin halving dates history

The history of Bitcoin halving dates is an important part of understanding the overall trajectory of the bitcoin halving. Here is the track record of bitcoin halving date:

  1. November 28, 2012: The block reward was reduced from 50 BTC to 25 BTC per block
  2. July 9, 2016: The block reward was reduced from 25 BTC to 12.5 BTC 
  3. May 11, 2020: The block reward was reduced from 12.5 BTC to 6.25 BTC 

3.1 First bitcoin halving

The first halving occurred on November 28, 2012, when the Bitcoin block reward was cut from 50 coins to 25 coins per block. 

The subsequent halvings occurred in 2016 and 2020 respectively. Each time, this event has had a significant impact on the market price and activity surrounding Bitcoin.

Bitcoin halving is credited as one of the driving forces behind Bitcoin’s meteoric rise over the past decade. With each successive halving, investors become more bullish on Bitcoin’s future potential. This makes it an exciting time to be involved in the cryptocurrency markets and keeps investors eager for each upcoming halving date.

3.2 Next bitcoin halving date

The next bitcoin halving is expected to occur in April 2024. It’s hard to know the exact time, as it only happens after 210,000 blocks are created with bitcoin protocol. As seen in the chart above, the next bitcoin halving will therefore be after the 840,000th block is completed and since one block is added to the network every 10 minutes, it’s generally agreed that this will take place somewhere between April and May 2024. 

As anticipated results, the miners’ rewards will be reduced by half. The current block reward is 6.25 BTC, and after this halving it will be reduced to 3.125 BTC. This event, along with the fact that there will only ever be 21 million Bitcoin, creates a deflationary effect on the currency which increases its scarcity value over time as more people join Bitcoin's network and demand for it increases.

BTC halving dates also impact miners in a big way as their rewards are cut in half but this is an integral part of the system ensuring that inflation remains low and that no one has control of price manipulation or inflation. All-in-all, this should benefit Bitcoin's long-term outlook and provide a crucial boost to its future potential around 2024 when the halving takes place.

4. Key Highlights

4.1 Bitcoin Halving Basics

At its core, the Bitcoin halving reduces the rate at which new Bitcoins are created by half. This inherent feature ensures that the total supply of Bitcoin remains capped at 21 million, making it a deflationary asset. Bitcoin mining is influenced by the BTC halving event as the mining rewards get reduced by half. Consequently, the reduced incentives for mining restricts the supply of new Bitcoin being issued, making BTC more scarce.This controlled supply is a fundamental departure from traditional fiat currencies, which can be printed without limit by central authorities. This is a feature that has resonated with Bitcoin advocates since the cryptocurrency's inception.

The reduction of the miners' rewards has a profound impact on the supply dynamics of Bitcoin. With fewer new coins entering circulation, Bitcoin's scarcity intensifies, becoming a fundamental driver of its value. It's important to note that while the reduction in new Bitcoin creation is significant, miners continue to play a crucial role in securing the network, verifying transactions, and maintaining its integrity. 

4.2 Historical Price Patterns

A historical pricing pattern has been observed with past Bitcoin halvings. The surge in BTC’s price  pre-halving has often been followed by sustained growth in the months post-halving. Some argue that these historical price patterns could potentially underscore Bitcoin's reputation as a reliable store of value and a hedge against inflation. The anticipation of reduced supply, coupled with increasing mainstream adoption, tends to fuel investor interest and price appreciation. There are however no guarantees that this will follow the same results in future. Below you can see the percentage increase 12 months before the halving,  and then a year after the halving.

Halving 1, 2012: +385% 12 months before the halving, 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 

The historical prices can be seen in the graph below.

(Coinmetrics via CoinDesk)

4.3 Stock-to-Flow Ratio

The concept of "stock-to-flow" measures the existing supply of a commodity (in this case, Bitcoin) relative to the new supply entering the market. Following each halving, Bitcoin's stock-to-flow ratio experiences a significant boost, highlighting its escalating scarcity. Many experts regard this ratio as a fundamental indicator of Bitcoin's long-term value.

This ratio is often compared to that of precious metals like gold, further reinforcing the idea that Bitcoin is a new form of digital gold—a store of value in the digital age. 

4.4 Investor Significance

The Bitcoin halving event isn't solely about miners; it's a significant consideration for investors too. It affects the entire Bitcoin ecosystem and can influence price dynamics. Investors should understand how this reduction in new supply can impact their investment strategies, particularly in the context of long-term holdings.

4.5 Hedge Against Inflation

Bitcoin's narrative as a hedge against inflation and economic uncertainty gains traction during and after halving events. This narrative aligns with the broader adoption of Bitcoin as a store of value in traditional financial markets.

5. Conclusion

In summary, the Bitcoin halving is a transformative event in the cryptocurrency sphere, reshaping supply dynamics and potentially impacting the value of Bitcoin. Understanding the Bitcoin halving's implications is crucial for crypto traders and investors , as it plays a pivotal role in the evolving landscape of digital assets.

Whether you're a seasoned trader or new to the world of crypto trading, staying informed about Bitcoin's halving events is also important towards understanding altcoin price action as well.Bitcoin's unique characteristics, highlighted by the halving, position it as a disruptive force in the world of finance and a store of value for the digital age.

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This material is for informational purposes only, and is not intended to provide legal, tax, financial, or investment advice. Past performance is not necessarily indicative of the future nor a reliable indicator of the likely performance of any investment. Recipients should consult their own advisors before making these types of decisions. One Trading has no responsibility or liability for any decision made or any other acts or omissions in connection with Recipient’s use of this material. 

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