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Here we are, the fourth Bitcoin halving just took place, and everyone in the crypto sector is wondering what the event will bring, not only for the largest cryptocurrency by market cap, but for the entire crypto space.
On a Friday night, the network slashed the incentives its miners receive for confirming blocks. Everyone was prepared for the event designed to slow down the issuance of coins and maintain Bitcoin’s scarcity feature. Halving events are crucial to maintain Bitcoin’s digital gold-like status characteristic because the asset is already volatile enough and it requires adjustments to remain a store of value. Its price has been quite volatile ahead of the halving, and investors keep their eyes on Bitcoin price prediction after it to try to figure out where the cryptocurrency may head next.
Crypto enthusiasts believe that mechanically the halving event shouldn’t have any impact on its price in the short term, but some big value fluctuations might happen in the following months.
If you want to add Bitcoin to your investment portfolio, post-halving, this article could help you figure out if it’s the right move for you.
Since Bitcoin’s White Paper was released, the crypto sector was aware that halving events are mandatory to cut miners’ revenue in half and consolidate the coin’s status as a scarce asset. It aims to rationalize the industry capex and network hashrate to improve operators’ experience in the long run, so while some miners might find it daunting for their profits, it will bring only benefits for those who manage to survive the process.
Every four years the network goes through a halving to slash the rate at which new coins are introduced into circulation by 50%. The mechanism is meant to prevent inflation from affecting Bitcoin and control the pace at which the total supply of Bitcoin is released. If the ecosystem checks all the scheduled halving events, the last bitcoin will be mined somewhere around 2040.
The last halving event saw the miners’ reward cut from 6.25 to 3.125 bitcoins per block, which directly affects the overall supply. ViaBTC mined the halving block on April 20, and it was the 840.000th block added to the network. The miner earned around 40 bitcoins, which value over $2.6 million for the block.
A short history of all Bitcoin halvings.
2012 – the first halving
The first ever halving in the network happened on November 28th, 2012 and cut down the reward to 25 BTC. At the date of the event, BTC’s price was $12.35, but it reached $964 a year later.
2016 – the second halving
The second halving event took place on July 9, 2016 and reduced the reward to 12.5 BTC per block. The price spiked from $663 to $2,500 in a year.
2020 – the third halving
On May 11, 2020, the third halving event reduced the reward to 6.25 BTC, and the price was $8.500 at the time. Over the next months, Bitcoin reached its peak and was valued at $69.000.
2024 – the fourth halving
The last halving event happened on April 20, 2024, and 1 BTC cost around $62.000. Only time can tell how much it’ll value in a year, but Bitcoin enthusiasts are positive it’ll reach new highs.
History shows that Bitcoin’s price tends to increase post-halving events, and if it doesn’t spike immediately after, it most assuredly follows an upward trajectory in the following months. Until now, there has been a surge for about seven months following the halving event. However, it’s essential to note that the market has always headed to a downturn a year later because investors tend to sell their assets once they reach the highest- possible price.
But crypto experts believe that Bitcoin might have a different trajectory now because it has already registered considerable surges in price, even before the halving. It could mean the cycle will be different this time, or the time frame could be more compressed. Bitcoin, together with the other cryptocurrencies have just bounced back from a bear market, and have reached significant values, so the BTC price is close to record values.
However, it’s quite challenging to tell how high the price could go, but everyone holding BTC in their portfolios should be ready for some volatility.
Some crypto experts are reticent in believing that Bitcoin will surge to such highs it did previously because the US Federal Reserve no longer has the relaxed monetary policy it has in 2020. Back then the interest rates were much lower than at the moment. High interest rates have led some investors to remove risky assets like Bitcoin from their portfolios.
However, uncertainty lurks above the crypto space because there have been hints that the US Fed could cut interest rates by the end of the year. It means that investors could remain cautious for the time being, and wait until the rates drop to buy Bitcoin, or other cryptocurrencies.
This Bitcoin halving is different, without any doubt
This event was surrounded with great expectations, considering that all the other halvings have triggered price rallies. Sector experts have debated whether the halving will be priced in or cause a supply shock and trigger a price surge. Those who support the first theory state that everyone is well informed on the importance of the event, and no seasoned investor would undervalue the cryptocurrency any longer. Those who support the second theory rely on the boom Bitcoin experienced every time it went through a halving event.
Regardless of the group you’re part of, you know this halving is different because it’s the first time in history when the coin’s price increased before the event.
The near-term effects are just around the corner, so we can only witness if the network will further consolidate itself or it will go on a different trajectory than in the past.
