A Comprehensive Guide to 2024 Bitcoin Halving: Why It’s Crucial 

Understanding Bitcoin Halving

Bitcoin halving is an event that fundamentally shapes the cryptocurrency market and has significant implications for investors, miners, and enthusiasts alike. In this comprehensive guide, we will explore the concept of Bitcoin halving and the historical impact it has had.

What is Bitcoin Halving?

Bitcoin halving is an in-built mechanism within the Bitcoin network that reduces the reward for mining new blocks by 50% approximately every four years. As of 2023, miners are awarded 6.25 bitcoins (BTC) for each block successfully mined. The next halving, expected in April or May 2024, will reduce this reward to 3.125 BTC.

Why Does Bitcoin Halving Matter?

Halvings are integral to Bitcoin’s supply control. By periodically cutting the block reward, halving limit the speed at which new coins are created, enhancing scarcity. Historically, Bitcoin has experienced significant price rallies after each halving, which draws attention and excitement from investors.

Bitcoin’s Journey: From Obscurity to Global Phenomenon

Since 2020, Bitcoin has evolved from a specialised internet curiosity into a global financial instrument, surviving challenges like the COVID-19 pandemic, geopolitical tensions, and industry setbacks. Its price has seen immense volatility, soaring to an all-time high of US$68,624.09 in 2021 and later falling to $15,621.40.

Bitcoin Halving and Mining Dynamics

The anticipation of halving can create both excitement and concern within the mining community. With the decrease in block rewards, miners must adapt and innovate to stay profitable. The requirement for Bitcoin to hit US$98,000 by halving day to keep publicly traded mining companies out of the red indicates the pressures faced.

Basics of Bitcoin Network and Mining

Understanding halving requires comprehension of Bitcoin’s underlying technology, blockchain. The network operates through nodes, with miners using a process called proof-of-work to validate transactions. Mining forms the backbone of the blockchain network, and the halving event impacts this ecosystem significantly.

Historical Bitcoin Halving’s

As of April 2023, three halvings have occurred, reducing rewards from:

• 50 bitcoins in 2012
• 25 bitcoins in 2016
• 6.25 bitcoins in 2020

These reductions are set to continue until 2140 when Bitcoin’s maximum supply of 21 million coins is reached.

Let’s look at the price performance after previous Bitcoin halving  events:

**Below in USD**

1. First Halving: November 28, 2012

Pre-Halving Price: Approximately $12

Post-Halving Price:

• 30 Days Later: Roughly $13
• 150 Days Later: Approximately $100
• 1 Year Later: Roughly $1,100
• Percentage Gain 150 Days After Halving: Approximately 928%
• Key Insights: The first halving saw a significant increase in the price of Bitcoin, particularly in the months following the event. This set the stage for Bitcoin’s entrance into broader public consciousness.

2. Second Halving: July 9, 2016

Pre-Halving Price: Approximately $650

Post-Halving Price:

• 30 Days Later: Roughly $660
• 150 Days Later: Approximately $760
• 1 Year Later: Around $2,500
• Percentage Gain 150 Days After Halving: Approximately 16%
• Key Insights: While the immediate reaction to the second halving was somewhat subdued, the price of Bitcoin continued to trend upward. Many analysts connect this period to the increasing professionalisation and institutional interest in Bitcoin, leading to a more sustained growth pattern.

3. Third Halving: May 11, 2020

Pre-Halving Price: Approximately $8,500

Post-Halving Price:

• 30 Days Later: Roughly $9,500
• 150 Days Later: Approximately $10,400
• 1 Year Later: Around $57,000 (with an all-time high of $68,624.09 in November 2021)
• Percentage Gain 150 Days After Halving: Approximately 24%
• Key Insights: The third halving took place during a period of economic uncertainty due to the global COVID-19 pandemic, yet Bitcoin saw steady growth. The year following the third halving saw significant attention from institutional investors, a rise in the acceptance of cryptocurrencies, and regulatory considerations, all contributing to dramatic price fluctuations.

What’s Ahead: Predicting the Future

Predicting the exact effects of the upcoming halving is speculative. However, historical patterns and the growing mainstream acceptance of Bitcoin suggest exciting possibilities.

Bitcoin halving is more than a technical event; it’s a market milestone that draws attention from all corners of the financial world. The understanding of this phenomenon is vital for anyone engaged with cryptocurrencies, whether a hobbyist or a serious investor.

 

Remember to subscribe to this newsletter and follow us on social for regular updates on the dynamic world of blockchain and cryptocurrency. If you’re interested in an easy and personal way to buy/sell/swap cryptocurrency, don’t hesitate to contact us – call 1800 AINSLIE. Our team of friendly consultants are ready to guide you, your company or SMSF through the process, making your cryptocurrency buying journey effortless. We also offer industry-leading crypto custody with minute-by-minute internal audits to guarantee the safety of your assets.