Bitcoin is by far the world’s largest cryptocurrency and has been termed as a revolutionary ‘digital gold.’ The crypto completed its fourth halving on Friday, April 19, 2024, which means the incentive for miners has been cut in half again. Halving is built into the Bitcoin blockchain code, so it isn’t anything new. However, the latest halving won’t have the same results as those before. Experts aren’t expecting much of an increase in Bitcoin’s price, especially after the crypto hit an all-time high of $73,800+ in March 2024. Here’s an overview of the rising demand for Bitcoin, the recent halving, and what investors can expect:
All-Time High Demand for Bitcoin
Bitcoin and other cryptocurrencies have become mainstream payment methods accepted by online retailers, service companies, and bookmakers. Major stores like Amazon and Microsoft accept BTC payments and the same goes for companies that sell digital products. Even the best bank transfer casinos are starting to accept deposits and withdrawals made using Bitcoin wallets. Some even feature Bitcoin slots, roulettes, and blackjacks. Others have exclusive casino bonuses for BTC deposits. Halving is a big event in the Bitcoin mining community because it usually means Bitcoin prices will move upward in the coming months.
Bitcoin miners are the biggest and most consistent sellers of BTC. Most sell the Bitcoins they earn to offset the costly energy bills and expenses required to mine. Holdings can sell their positions at any time, but miners have invested in creating new coins just to sell them. When their incentive is halved, it immediately means less Bitcoin is available for sale. The latest halving also coincides with an increased demand for Bitcoins caused by new Bitcoin ETFs. OG bitcoiners, new investors, and BTC EFT holders are now all competing for the slashed supply, so prices are bound to get higher.
What Is Bitcoin Halving?
Bitcoin halving is the technical term used to describe a change in the crypto’s underlying blockchain technology. This change reduces the rate at which new Bitcoins are created and occurs whenever 210,000 new coins have been added to the existing supply. Bitcoin halving occurs roughly every four years and is designed into the blockchain on which the crypto runs. Halving slows down the creation of new Bitcoin, halving the rewards they get for new coins. Initially, the reward for a new block was 50 Bitcoins.
After the first halving in 2012, the reward dropped to 25. Until Friday (before the latest halving), miners received 6.25 BTC, which has now dropped to 3.125 BTC. Reducing the incentive for miners naturally slows down the release of new Bitcoins, resulting in a perceived shortage or the finite nature of the cryptocurrency. Bitcoin’s pseudonymous inventor Satoshi Nakamoto capped the supply of BTC at 21 million. Currently, over 19 million Bitcoins are in supply, which means only less than 3 million coins new coins will be released.
Will the Recent Halving Increase BTC Value?
Traditionally, halving events have preceded Bitcoin ‘bull runs’ where the price shoots up as a response to the cut supply. However, each subsequent halving has come with diminished price hikes. For instance, the 2012 halving caused a 93x increase in Bitcoin’s price, while the 2016 halving resulted in a 30x increase. The third halving in 2020 only saw an 8x increase in BTC value and the most recent one is expected to be something mesely. However, even a 1.5x increase in the current price would send Bitcoin’s value well beyond the $120,000 mark. Bitcoin saw a new all-time high in March 2024 after reaching $73,803.25 before settling around the $64,000 mark.
Savvy crypto market analysts insist that Bitcoin halvings have little to no impact on the value of BTC. The 2012 halving saw a 12% increase in price within weeks and a 659% hike over 12 months. In 2016, prices went up by 1.3% before plunging and ascending randomly. Crypto experts attribute price movements to speculative hype, new technology, regulatory policies, actions of crypto whales, and other factors, with halving rarely credited for BTC value changes. The latest halving is less likely to cause any changes in Bitcoin value. However, every day after the halving will see less Bitcoin being sold by miners. This can build up over the next months, resulting in significant changes.
Key Takeaways and the Future of Bitcoin
Like other commodities and services, Bitcoin plays by the laws of supply and demand. When supply goes down and demand rises, BTC value will inevitably increase. New coins are created when miners use computing power to solve complex mathematical puzzles in building the blockchain. Miners run powerful machines that record new blocks of Bitcoin transactions and add them to the public immutable ledger. Halving makes mining less profitable, especially as we get closer to the maximum supply of 21 million bitcoins. When the cap is reached, there will be no more Bitcoins left to be mined.
However, miners will still be able to profit from optional transaction fees paid by merchants who want faster settlements. No major move was recorded on the day of Bitcoin halving and this is likely to be the case for many months. However, pundits predict BTC prices to keep rising in the coming months. As supply from miners diminishes, and demand from whales and ETF holders increases, the value of Bitcoin will more than likely soar. Nevertheless, Bitcoin prices are heavily influenced by many other factors and a single move by a whale or holding can cause panic and rapid fluctuations.
