Bitcoin Halving: What It Is and Why It Matters for Crypto Investors

what is the bitcoin halving

Presently, more than 19 million bitcoins have already been mined, leaving under 2 million left to be created. The bitcoin protocol periodically reduces the number of new coins earned by miners in a process called software development outsourcing halving. Many investors have high expectations for halvings because, in the past, prices generally trended upward after the event. However, the trends historically moved slowly, over months and years until the next halving, and there is no guarantee that Bitcoin will follow the same trajectory. So, whether you invest in Bitcoin before, at, or after a halving depends on market conditions at the time, your outlook, and your risk tolerance level.

At the moment, Bitcoin has an inflation rate of less than 2%, which will decrease with further halvings, says David Weisberger, CEO of trading platform CoinRoutes. The cryptocurrency market is unpredictable, and while historical trends can provide insights, they do not guarantee future results. Investing in Bitcoin, whether before or after a halving, should be based on a comprehensive understanding of the market and your financial goals. This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk.

Forbes Advisor does not provide financial product advice and the information we provide is not intended to replace or be relied upon as independent financial advice. Your financial situation is unique and the products and services we review may not be right for your circumstances. Performance information may have changed the best in blockchain and cryptocurrency week 38 leaderboard since the time of publication.

Does the Bitcoin Halving Affect the Price of Bitcoin?

For instance, after the first halving, the reward for Bitcoin mining dropped to 25 BTC per block. The following halving was in July 2016, and the most recent halving was in May 2020. The somewhat predictable nature of bitcoin halvings was designed so that it’s not a major shock to the network, experts say. For miners, the halving event may result in consolidation in their ranks as individual miners and small outfits drop out of the mining ecosystem or are taken over by larger players.

What will happen to bitcoin miners during the halving?

It became popular with investors once it was noted that there was the potential for gains. Investors poured into the new asset space, creating demand that the cryptocurrency’s designers may not have anticipated. For investors, a halving represents a reduction in the new coin supply, but it also offers the promise of an increase in investment value if the event’s effects remain the same. But this places Bitcoin investing into the realm of speculation because those invested in the cryptocurrency are hoping for gains. The Bitcoin halving is intended to counter any inflationary effects on Bitcoin by lowering the reward amount and maintaining scarcity.

There is an acceptable inflation rate that is considered good for an economy—usually 2%—but this number is generally a target set by central banks as a goal rather than a reachable figure. According to these reports, the near-term effects of the halving may be limited to the bitcoin mining sector, where consolidation could occur as overall hashrate declines due to decreased profitability. In the past, halvings have led to new all-time highs for the bitcoin price in the months following the events. However, this time has been different, as the bitcoin price has already reached a new all-time in the months prior to the halving.

What is the price of Bitcoin after 2024 halving?

Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor. Over the past two decades, he’s reported on energy, cannabis, mining, agriculture and commercial fishing from the Americas, Europe and Asia. The Wall Street Journal, Barron’s, U.S. News & World Report, New Scientist, VICE and other publications have featured his work. The available supply of fiat currencies rises and falls under the watchful eyes of national central banks, but the total supply of bitcoin is fixed and immutable. Consumers and retail Bitcoin users might be affected by a halving in the value of the Bitcoin they hold.

“While the halving reduces the reward for miners, it equally lowers the supply of new coins without reducing the demand, notes Patricia Trompeter, CEO of cryptocurrency miner Sphere 3D Corp.
It is important to check any product information directly with the provider.
In the past, halvings have led to new all-time highs for the bitcoin price in the months following the events.
Gains made regarding market value might offer inflation protection for investors, but they don’t for the cryptocurrency’s intended use as a payment method.
After the first halving in November 2012, Bitcoin rose from $US12 to over $US1,150 in 2013.
At that point, there will be 21 million BTC in circulation and no more coins will be created.

A decentralized network of validators verifies all Bitcoin transactions in a process called mining. They are paid 3.125 BTC, which is worth about $65,207.50, as of May 6, 2024. They are the first to use complex math to add a group of transactions to the Bitcoin blockchain as part of its proof-of-work mechanism. In theory, the reduction in the pace of Bitcoin issuance means that the price will increase if demand remains the best ways to earn free bitcoin same. Halving’s role in controlling the supply of new Bitcoins is one of the reasons the world’s most popular cryptocurrency is seen as a store of value that’s more akin to gold than a fiat currency.