Currently, when it comes to the main reason driving a new uptrend of the market, many people will probably refer to the concept of Bitcoin Halving.
So what is Bitcoin Halving? Why is this an important event that can help you change your position? In this article, Allinstation will go with you to find out and answer!
What is Bitcoin Halving?
Bitcoin halving is the process of halving the block reward of Bitcoin mining. It happens every 4 years, corresponding to every 210,000 blocks mined, until all 21 million Bitcoins are mined (expected in 2140).
The next Bitcoin Halving is expected to happen in late March or early April 2023.
Why Bitcoin Halving?
To understand how the Bitcoin halving works, we need to understand how the Bitcoin network works. Blockchain is the core technology of Bitcoin, consisting of a set of nodes that run software and store a history of transactions on the network. Each node approves or rejects the new transaction. Transactions are aggregated into blocks, which are then approved and appended to the existing blockchain.
Bitcoin mining is the process of using computers to verify and validate transactions on the blockchain. Miners must solve complex mathematical equations on the Bitcoin network to verify transactions. Once successful, they are rewarded with Bitcoins.
When all 21 million Bitcoins are mined, miners will no longer be rewarded with Bitcoins, but instead with transaction fees. This fee ensures miners remain motivated to keep the Bitcoin network running.
Impact of Bitcoin Halving on Bitcoin Price
Bitcoin Halving May Fuel a New Bullish Bullish for Bitcoin
The Bitcoin Halving process includes the following steps:
- Split the reward: The default reward for each new block will be halved.
- Reducing Inflation: Such a reduction in rewards helps to reduce the inflation of Bitcoin.
- Decrease in Supply: As the reward decreases, the supply of Bitcoin also decreases.
- Increase Demand: Reducing the supply of Bitcoin can increase the quantity demanded and increase the value of Bitcoin.
- Coin price increase: If the Bitcoin value increases, the reduction of the reward will not affect the motivation of the miners.
- The miner's reward remains the same despite the lower reward ratio.
As you can see so as not to make miners lose motivation to contribute to the platform. The Bitcoin price must go up so that the miner's reward doesn't go down. This is the key to driving a new uptrend for Bitcoin and the crypto market.
Bitcoin price history after each Bitcoin Halving
Theoretically, after each Bitcoin Halving, the Bitcoin price is likely to enter a strong bull run. So to verify, let's look at the past of previous Bitcoin Halvings.
| Halving | Block height | Event date | Block reward | BTC Price |
| 0 | 0 | 04/01/2009 | 50 BTC | 0 USD |
| 1st | 210,000 won | 11/28/2012 | 25 BTC | 12.31 USD |
| 2nd | 420,000 won | 09/07/2016 | 12.5 BTC | 650.63 USD |
| 3rd | 630,000 won | 12/05/2020 | 6.25 BTC | 8,912.33 USD |
| 4th | 840,000 won | 31/03/2024 | 3.125 BTC | |
| 5th | 1,050,000 won | 2028 | 1.5625 BTC |
The first halving took place on November 28, 2012, when the Bitcoin price increased from $12 to $1,207 on November 28, 2013. The second halving took place on July 9, 2016, Bitcoin price from $647 rose to $18,972 on December 17, 2017. Then, within a year, the Bitcoin price dropped from that peak to $3,716 on December 17, 2018, still about 575% higher than the pre-halving price.
The last halving took place on May 11, 2020, when the Bitcoin price was at $8,821 on April 14, 2021, escalated to a peak of $63,233, up 617%. After 1 month, the price reached a record of $49,504, an increase of 461%.
From there, you can see that after the Bitcoin Halving in the past, the Bitcoin price has grown strongly.
At the same time, you also see that after each halving, the price of Bitcoin spikes and then plummets. As an example in 2017-2018, the Bitcoin price rose to $19,000, then dropped to $3,700. The price after the halving dropped sharply, but it was still higher than the pre-halving price of $650.
Predicting the Future of Bitcoin After the Halving in 2024
Based on past data and results from previous halving events, most investors believe that the value of Bitcoin will increase and possibly reach new ATH after the fourth halving in 2024. .
Currently, the 19 millionth Bitcoin has been mined in April 2022, leaving only about 2 million Bitcoins unmined. It is expected that the next Bitcoin halving will take place on March 2, 2024, with the block reward for mining reduced to 3,125 BTC. However, the smaller the ratio of subsequent halving events, so the impact on its value will also decrease.
However, the future value of Bitcoin depends not only on the halving but also on many other factors. Positive developments of Bitcoin in 2021 such as El Salvador accepting Bitcoin as legal currency, launching the first Bitcoin ETF, Bitcoin blockchain completing Taproot upgrade, allowing Bitcoin to run smart contracts, etc. creating momentum for the appreciation of this currency. Additionally, by the end of March 2022, nearly 8,000 services and products accepted Bitcoin as a form of payment. As more people accept Bitcoin, the demand for this coin will increase and push the value of Bitcoin up.
Summary
Allinstation has answered the question of what is Bitcoin Halving. Let's learn and evaluate together to make the most informed investment decisions. Wish you luck!!!
Please note that this is not investment advice.
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