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The long-awaited Bitcoin halving event has come to an end, quietly marking a historic moment in the world of digital assets.
On April 19, 2024, the block reward for Bitcoin miners was cut in half from 6.25 BTC per mined block to 3.125 BTC per mined block. But without the advertising, you wouldn't know that. There were no bells tolled or fireworks to light up the sky, but the price of Bitcoin remained relatively stable at about $64,000.
But just because the quadrennial event passed without any immediate major impact on retail investors or the market doesn't mean the Bitcoin halving didn't happen. Far from it. In fact, the halving will have significant implications for Bitcoin miners, traders, and investors.
When the rate at which new Bitcoins circulate is halved, the scarcity mechanisms built into cryptocurrencies will have an impact over time. This shift in supply and demand dynamics has the potential to shape the long-term trajectory of Bitcoin and the broader cryptocurrency market.
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So what happened?
On April 19, 2024 at 8:09 PM ET, Bitcoin's fourth halving occurred. While some avid international enthusiasts may have stayed up late or woke up early to see Bitcoin blocks cross 840,000, the halving itself, at least initially , is a no-brainer for most investors.
The direct impact of the halving is mainly felt by Bitcoin miners, who believe that block rewards will be cut in half, impacting profitability and potentially changing the crypto mining industry. Masu.
After this most recent halving, the reward for mining a Bitcoin block decreased from 6.25 BTC per block to 3.125 BTC per block.
As the rate of new Bitcoins in circulation decreases by 50%, this asset becomes increasingly rare. This built-in deflationary mechanism creates potential long-term upward pressure on Bitcoin price. However, the relationship between halving events and price increases is not always simple and can be influenced by various market factors.
“Bitcoin trading volume typically increases most significantly in the 60 days before a halving, as interest builds and the price gains momentum,” said Megan Stahls, market analyst at trading platform Stake. It's for the sake of it.''
“This has happened again, with crypto exchange data showing a notable increase in volume in March compared to February, as investors seek greater exposure.”
How much is Bitcoin worth now?
On April 13, with about a week left until the halving event, the price of 1 BTC fell from over $67,000 to $62,000. At that point, if the reward for mining a block of Bitcoin is set at 6.25 BTC, an individual miner would receive a reward equivalent to approximately $387,500 per block of Bitcoin mined.
As of April 20, the day after the event, the price of BTC was stable at around $64,000. This means a new mining reward of 3.125 BTC is worth approximately $200,000.
Stols also cited the approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission in January as another potential tailwind for Bitcoin prices after the recent halving event. are listed. These ETFs have made it easy for investors to gain exposure to Bitcoin without going through a crypto exchange.
“Bitcoin ETFs have proven to be more popular among Stake’s older investors, especially those over 45,” she says. “Young investors may already have direct exposure to Bitcoin through crypto exchanges; We provide a solution for older investors who don’t want to deal with it.”
However, Bitcoin is also sensitive to rising interest rates, so investors should also consider this, Stals said.
“There are still concerns that the U.S. has not yet succeeded in controlling inflation, and traders are starting to lower their expectations for rate cuts in 2024,” he said.
March's Consumer Price Index (CPI) data was better than expected, with inflation remaining at 3.5% over the past 12 months, dampening hopes of a rate cut in the first half of this year. The crypto market was in red on the day the latest CPI news was announced.
How does this affect miners?
Smaller mining operations may face challenges in the aftermath of the halving due to reductions in mining rewards. However, the rise in Bitcoin prices before the event could help miners offset some of the additional costs in the short term.
“Miners are facing revenue pressure.” [after the halving] Because it increases the computational power and energy required to mint new coins,” says Stals. “Large miners should have the resources to invest in new hardware and find more efficient energy sources, but every time a halving occurs, smaller miners are forced to continue operating. becomes more difficult.”
However, Stals also pointed out that market trends play a key role in miners' profitability, saying, “Investing in new hardware and finding efficient energy sources are key to miners' long-term success.” It is,” he added.
What to watch out for in the coming months
Now that the Bitcoin halving event is over, investors are focused on how it will affect the cryptocurrency's price and market trends in the coming weeks and months. Historical data suggests that the path to new highs will not be easy.
“The price of Bitcoin has historically increased around halvings, but it has not always increased in a linear manner. After the previous halving, the price reached new peaks 220 and 240 days later. It often fell before,” Stals said.
“While half-life is often portrayed as a short-term event, it can take several months for the full effect to occur.”
One positive sign for Bitcoin's near-term price movement is the recent net inflows into Bitcoin ETFs, indicating that institutional investors are now more likely to be buyers than sellers.
However, Stals added, “Investors should closely monitor trading activity, as large one-off sales by whales can have a negative impact on short-term prices and sentiment.” .
Is Bitcoin more volatile now?
Investors should expect increased volatility in the coming weeks and months as the market adjusts to new supply dynamics and miners adjust to reduced block rewards. This volatility can present both opportunities and risks for those seeking exposure to Bitcoin.
A well-thought-out investment strategy that manages risk through appropriate levels of exposure and maintains a long-term view of an asset's potential can help potential investors manage this volatility while the market finds a new equilibrium. Stolls suggests that we need to be prepared for this.
What were the results of past halving events?
Looking back at past halving events, the Bitcoin market experienced significant price increases in the months following each halving.
After the first halving in November 2012, the price of Bitcoin rose from around $11 to a peak of $1,100 in November 2013. Similarly, after his second halving in July 2016, the price rose from about $650 to nearly $20,000 by December 2017. The following year, BTC rose above $69,000.
Although past performance is no guarantee of future results, these historical precedents suggest that a reduction in the supply of new Bitcoins in circulation after the halving will lead to increased scarcity and, as a result, an increase in price. suggests that it is possible. However, it is important to note that the Bitcoin market has matured significantly since the last halving, with increased participation by institutional investors, regulatory oversight, and mainstream adoption.
As a result, current halving results may not accurately reflect past results, and investors should remain vigilant in monitoring market trends and adapting their strategies accordingly. there is.
When is the next halving event?
With this year's halving event in the rearview mirror, many Bitcoin enthusiasts and investors are already looking ahead to the next BTC milestone. Bitcoin's halving is programmed to occur every 210,000 blocks, which equates to roughly once every four years.
Given this schedule, the next halving event is expected to occur in 2028 when the total number of mined Bitcoin blocks reaches 1,050,000.
Each time a halving event occurs, the block reward is cut in half, and the supply of new Bitcoins in circulation continues to decrease over time. This built-in mechanism is designed to ultimately lead to higher prices as demand increases while supply decreases.
However, the relationship between halving events and Bitcoin price is complex. While past halvings have been followed by significant price increases, the Bitcoin market has been affected by a number of factors, including regulatory changes, macroeconomic conditions, and an increased level of adoption, particularly after the approval of a spot Bitcoin ETF in the US. influenced by factors.
How many half-lives does it have?
As the Bitcoin network matures and adapts, it is natural to wonder how long the halving process will last. The answer lies in the programming of the coin.
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, has set a mining hard cap of 21 million Bitcoins. With each halving, the rate at which new Bitcoins are created slows down, and the last Bitcoin is expected to be mined around 2140.
This gradual reduction in supply is designed to potentially boost Bitcoin's value as demand increases, but it's important to remember that cryptocurrency markets are highly speculative. is. Additionally, past performance does not guarantee future results.
The future is always uncertain, but one thing is clear: Bitcoin's halving will continue to be a defining event for the cryptocurrency, shaping its supply dynamics and impacting its value for years to come. That would influence the proposal.
Frequently asked questions (FAQ)
When was the last time Bitcoin halved?
The most recent Bitcoin halving took place on April 19, 2024. At that time, the reward for each block of Bitcoin mined was cut in half from 6.25 BTC to 3.125 BTC.
This event occurs approximately every 4 years, or more precisely every 210,000 blocks. The next halving event is scheduled to occur another four years later in 2028. At that point, each block of Bitcoin mined is worth 1.5625 BTC to the miner.
What will the halving mean for Bitcoin?
The Bitcoin halving will reduce miners' block rewards by 50%. This means that the rate at which new Bitcoins circulate is halved. While the immediate impact on Bitcoin's price may not be significant, the halving is expected to have a long-term impact on the cryptocurrency's demand and supply dynamics.
As the supply of new coins decreases, the scarcity of Bitcoin increases, which can cause its price to rise over time. However, it is important to note that the relationship between halving events and price is not always simple and can be influenced by various market factors.
What does Bitcoin halving mean?
Bitcoin halving is a pre-programmed event that is part of the cryptocurrency's protocol. It is designed to control the supply of new Bitcoins into circulation and maintain the scarcity of digital assets. When a halving occurs, a miner's block reward, or the amount of Bitcoin they receive for successfully adding a new block to the blockchain, will be reduced by 50%.
This decrease in the rate of new coin generation is intended to have a deflationary effect on the cryptocurrency over time. The halving will also impact mining operators, as it will affect their profitability and may lead to changes in the mining environment.
