As Bitcoin’s next halving in 2024 approaches, what are its impact on bitcoin miners, crypto prices, and bitcoin price charts? Read on to find out.
April 20th is a significant date for the cryptocurrency industry, as it marks the much-anticipated Bitcoin’s next halving for 2024. This critical event is a pre-programmed feature in the digital currency, designed to regulate the flow of new bitcoins mined, or entering circulation. But before we delve into the details of the halving, let’s revisit the fundamentals of Bitcoin itself.
What is Bitcoin?
Bitcoin (not to be confused with “bit coin” or “bi t coin”) is the world’s first cryptocurrency. Introduced in 2009 by the enigmatic Satoshi Nakamoto, it revolutionised the financial landscape by establishing a decentralised digital payment system.
Unlike traditional currencies controlled by central banks, Bitcoin operates on a peer-to-peer network, eliminating the need for intermediaries in financial transactions. Bitcoin miners, the backbone of this network, dedicate significant computational power to validate transactions and secure the network. As a reward for their efforts, they are compensated in newly mined Bitcoins.
Why Are Bitcoins Mined?
Bitcoin mining is a complex process that involves solving cryptographic puzzles to verify and validate transactions on the Bitcoin network. By validating and securing a block on the blockchain, Bitcoin miners receive a reward in the form of bitcoins.
The first miner to crack the code gets the block reward, currently set at 6.25 bitcoins. However, there is a crucial twist – there is a finite number of Bitcoins to be mined, which is capped at 21 million. This scarcity is precisely where Bitcoin halving plays a pivotal role.
What is the Meaning of Bitcoin Halving?
The meaning of the term “halving” refers to the programmed reduction in the block reward for miners by half. This process, embedded within Bitcoin’s code, effectively reduces the rewards for each block validated.
The primary purpose behind the halving process is to combat inflation by maintaining a limited supply. In simpler terms, with fewer new bitcoins entering circulation, the theory suggests that demand will remain constant or even increase, potentially driving up the price of crypto.
When the first Bitcoin block was mined, miners were rewarded with a hefty 50 Bitcoins per block (which is worth a fair bit with the price of crypto today). However, the first halving in 2012 cut this reward in half, bringing it down to 25 Bitcoins. Subsequent halvings occurred in 2016 and 2020, further reducing the reward to 12.5 bitcoins and 6.25 bitcoins respectively.
The upcoming Bitcoin’s next halving in 2024 will slash this reward yet again, bringing it down to 3.125 bitcoins per block. This will undoubtedly have a ripple effect on the price of crypto and activity on cryptocurrency exchanges.
How Will Bitcoin’s Next Halving in 2024 Impact Bitcoin Price Chart and Crypto Prices?
The next Bitcoin halving is estimated to take place between April 19th and 20th 2024, with most experts pinpointing April 20th as the most likely date. Historically, the aftermath of each halving has been marked by significant surges on the Bitcoin price chart.
The 2020 halving, for instance, witnessed a bullish scenario where the price of Bitcoin skyrocketed after the event. Similar patterns emerged following the 2012 and 2016 halvings, with the strongest price gains materialising after the halving itself.
However, opinions are divided regarding the impact of Bitcoin’s next halving on the crypto price. While some analysts believe history will repeat itself with another price surge on the Bitcoin price chart post-halving, others argue that the current crypto landscape is vastly different.
“The halving is a very strong pro-growth factor for BTC price, and has already been partly in the price, but there is still high potential for further growth in the long term.” said Ruslan Lienkha, Chief of Markets at YouHodler, in response to the impact of the upcoming halving.
With regards to the price prediction of Bitcoin, Lienkha says, ” BTC has every chance to reach 80k. We may see an upward trend all the way through the halving, and then there may be profit fixation. As a consequence, some limited price correction may happen.”
The influx of institutional investments and the recent approval of Bitcoin exchange-traded funds (ETFs) could significantly impact the price trajectory this time around.
Hassan Ahmed, Country Director of Coinbase Singapore, says, “Since the last halving event, the introduction of US spot Bitcoin ETFs has changed how Bitcoin behaves in the market. These ETFs allow institutions to trade Bitcoin more easily, with about $4-5 billion traded every day. They currently hold about 1.1 million bitcoins, which is about 5.8% of all bitcoins in circulation.”
“These ETFs bring in a steady flow of money into Bitcoin, making the market dynamics tighter. However, this doesn’t guarantee that Bitcoin’s price will skyrocket due to a shortage in supply compared to demand. What’s significant is that ETFs make Bitcoin more accessible to big financial institutions, marking a major step towards mainstream acceptance. Therefore, many believe that the recent rise in Bitcoin’s price is just the beginning of a longer upward trend, but it will likely need more price increases to balance out supply and demand.” Ahmed added.
Ultimately, only time will tell how the crypto prices and overall volume on cryptocurrency exchanges will react to this significant event.
Bitcoin’s Next Halving in 2024 Will Shake Things Up In The Industry
Bitcoin’s next halving in 2024 is undeniably a momentous occasion for the cryptocurrency space. With past halvings demonstrating a tendency for the price to rise on the Bitcoin price chart, excitement is building as April 20th approaches.
This halving could even usher in a new era for cryptocurrencies, especially considering the growing institutional recognition, and pave the way for a more comprehensive global framework that integrates cryptocurrencies into the mainstream financial system.
Meanwhile, if you are looking to start your crypto journey by owning bitcoins of your own, you can take the first step with these cryptocurrency exchanges in Singapore!
This article was updated on 19th April, 2024, to include commentaries.
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