When we hear about Bitcoin halving most of us get curious about it and wonder how it will impact the cryptocurrency market. Just to let you know if you are unaware of the Bitcoin halving, It is one of the most important events for Bitcoin and for the entire cryptocurrency market and what we can expect from Bitcoin Having 2024.
What is Bitcoin Halving?
Bitcoin halving is a process in which the mining bitcoin reward of miners, who verify the bitcoin transactions on the blockchain, gets reduced to half. Since Bitcoin comes with a maximum supply of 21 million bitcoin, the reduction in the rewards for miners plays a very significant role in maintaining the value of Bitcoin over time as well as in regulating inflation.
The whole process of Bitcoin halving takes place every 4 years and thus it is considered a very important event not just for Bitcoin but also for the entire market as the entire cryptocurrency market is dominated and influenced by Bitcoin.
But why halving is so important? To understand this we need to check out its history
History of Bitcoin Halving
Bitcoin was launched in the year 2009 and the first halving took place on 28th November 2012. When the mining reward was reduced to 25 BTC from 50 BTC.
At that moment, Bitcoin’s price was around $12.39 and just within 5 months, its price got shot up to $227.98 on 11th April 2013. Which was already 18 times more than the halving-day price. But it didn’t stop there, in just a year on 2nd December 2013, the BTC price was already at $951.42. This was the highest peak BTC ever reached after the 1st halving. It was 76 times more than the halving-day price.
Similarly, The Second Bitcoin halving took place on 9th July 2016. The mining reward was cut in half from 25 BTC to 12.5 BTC. During that time the price of Bitcoin was around $570. And within one and half years, Bitcoin price topped $17802. At this point, bitcoin got noticed in the mainstream media and started getting popular all around the world. This time it was 31 times higher than its halving price.
Later in the year 2020, Precisely on 11th May 2020, Bitcoin halving took place slashing the mining rewards to 6.25 BTC. At that point, BTC’s price was around $9270. And within the next one and a half years, the price reached $66,953. This time it was only up around 7.2 times its halving price.
What to expect from Bitcoin Halving 2024?
After taking a glimpse over its history for the last 3 halvings that took place in 12 years. We can clearly see the price of Bitcoin has shot up after every single halving. Although the rate of growth had declined significantly with every next halving.
As we saw that starting with the first halving, it grew 76 times. Then in the second halving growth got slashed by more than half to 31 times, while in the last halving, it only grew 7.2 times. Although this looks concerning there is nothing much to worry about it.
Why? At the time of first halving the price of Bitcoin was hardly around $12.39 which was very much affordable for everyone. The only problem was not many people knew about it and its potential. But now the Bitcoin price is in thousands of dollars which isn’t affordable to everyone.
Secondly, you have heard about Angel Investors, who invest at a very early stage in a company. Even though the amount they invest is usually not very huge but they are considered to play the riskiest bet by investing at a very early stage. If the company turned out to be a good company then their investment would just skyrocket.
Thirdly, the potential of a small amount such as $1 to turn into $2 is very high giving back 100 % return but the same thing you cannot expect with big amounts like $1000. Similarly, when Bitcoin was very cheap, it had the potential, and manipulation was also easy thus you saw such as great rate of growth but now Bitcoin is not cheap and manipulation is also not easy anymore.
So what to expect with Bitcoin halving in 2024?
Here are the key points one can expect
Rise in the Price
Just like other halving one can expect the price of Bitcoin will rise up achieving another highest peak and breaking the previous highest price record of $66,953.
Rate of growth may decline
As we saw the decline in the rate of growth with every halving. We can also expect the growth to decline even more. Maybe this time it can only achieve 2-3x times the halving price.
Halving-day Bitcoin price
If we analyse the last three halving we get to see two different types of data patterns. Let’s understand them one by one.
The first data says that if we compare all the Bitcoin halving day prices then we see some similarity in patterns.
1st Pattern
Here are the Bitcoin halving day prices: $12.39, $570, $9270
The difference between all the prices is as follows
$570 / $12.39 = 46 times approx
$9270 / $570 = 16 times approx (Around 65% decline)
Now for the next bitcoin halving if the rate sustained at even 5 times
Still, the bitcoin price should be around $46000 at the time of 2024 halving.
2nd Pattern
Here are the Bitcoin halving day prices: $12.39, $570, $9270
The difference between the highest price and the next halving day price
$951.42 / 570 = 1.6 approx
$17802 / $9270 = 1.9 approx
If Bitcoin maintains at least a 1.5 ratio still the price should be $44635 while halving.
How Bitcoin Halving affects miners?
Bitcoin miners are the backbone of the Bitcoin blockchain network. They validate each transaction and add it as a new block to the blockchain. In return, they are rewarded with Bitcoin. However, with growing popularity, mining Bitcoin has become significantly difficult as well as a lot more expensive.
But since every 210,000 blocks mined, bitcoin halving takes place which reduces the reward by half. Which eventually means a lesser reward for the ever-increasing efforts. Yes, it is true that the price of Bitcoin is also increasing over a longer horizon but small businesses struggling with cash flows had to suffer the most because of the volatility of Bitcoin. Thus smaller ones may be forced to shut their businesses and the larger and established miners will continue to be in business.
Halving can also lead to an increase in transaction fees as miners will evaluate new ways to regain profits.
Hope you liked this article. To know more about Bitcoin visit bitcoin.org
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