Investing in Bitcoin can feel like a gamble, especially during turbulent times. You might manage your portfolio precisely, but the rollercoaster price swings can still trigger anxiety and irrationality. What if you could confidently predict Bitcoin’s price changes to make smarter investment moves? Well, you can. The next Bitcoin halving will arrive in 2028, and historical data reveals that Bitcoin price tends to rise in the months following the event. This blog will help you answer the question, "What is Bitcoin halving?“ and Will Bitcoin halving increase price?” We’ll explore why this happens and offer insights to help you capitalize on the next halving’s potential to boost Bitcoin’s price.
One of the best ways to prepare for the next Bitcoin halving is by studying past cycles. Bitcoin Magazine Pro’s Bitcoin analysis takes a deep look at Bitcoin’s historical performance and on-chain metrics to help you predict future price movements and make informed decisions about your investments as the next halving approaches.
What is Bitcoin Halving and Why it Matters to Investors
Bitcoin halving is an event that occurs approximately every four years when the reward given to Bitcoin miners is cut in half. This reduction lowers the supply of new Bitcoins entering the market, which increases scarcity and can act to raise its price if market conditions remain steady.
Block rewards are part of the blockchain’s automatic process of validating transactions and opening new blocks, known as mining. Miners compete to solve a puzzle; the first is awarded new Bitcoins. Their block is added to the blockchain, and the network starts another race. All miners confirm the data in the newly added block while trying to solve the puzzle for their new blocks, hoping for an ever-decreasing reward.
Is Bitcoin Halving a Good Thing?
Many experts believe Bitcoin halvings benefit Bitcoin’s ecosystem and market value. Others might not.
Inflation
One of the key concepts behind halving the reward is to address inflation concerns. Inflation is a decrease in the amount of goods that a certain amount of currency can buy at any given moment. In the U.S., inflation is measured by how much it costs to buy a basket of goods. An acceptable inflation rate 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.
The Bitcoin halving is intended to counter any inflationary effects on Bitcoin by lowering the reward amount and maintaining scarcity. This inflation “protection” mechanism does not protect Bitcoin users from the inflationary effects of the fiat currency to which it must be converted to be used in an economy.
Gains regarding market value might offer investors inflation protection, but they don’t for the method’s intended use as a payment method.
Demand
Because a halving reduces the number of new Bitcoins introduced, demand for new Bitcoins generally increases. This can be noted by looking at Bitcoin’s price after each previous halving event; it has typically risen. The historic increase in demand has driven price increases, which is good for investors and speculators.
Investing
Bitcoin wasn’t intended to be an investment. It was introduced as a payment method that attempted to remove the need for regulatory agencies or third parties to be involved in transactions. 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 it’s designers may not have anticipated.
For investors, a halving represents a reduction in the new coin supply, but it also promises an increase in investment value if the event’s effects remain the same. This puts Bitcoin investing into the realm of speculation because those who invested in it are hoping for gains.
Mining
Miners are the people, groups, or businesses that focus on mining for its profitability. Even as Bitcoin’s price fluctuated over the years, it remained a lucrative endeavor. The large mining businesses wouldn’t have continued operating if it hadn't. However, halving mining rewards cuts the endeavor less profitable, with each halving if prices remain the same or drop.
The large-scale mining facilities needed to remain competitive require enormous money and energy. The equipment and facilities need maintenance, and people are needed to conduct it. To maintain their position in the industry, they also need to upgrade their mining capacity.
Marathon Digital Holdings Expands Mining Operations Ahead of Bitcoin Halving 2024
Marathon Digital Holdings, one of the world’s largest mining firms, increased its Bitcoin holdings to 16,930 and its fleet of miners to 231,000 in February 2024. This brought the firm’s hash rate to 28.7 trillion hashes per second (about 5% of the network’s total hash rate as of May 2024).
The increase in production capacity and holdings was likely due to anticipations of the April 2024 halving and the amount of hashing power required to remain competitive while having the liquidity necessary to finance its operations. For smaller miners, a decrease in the reward means lower chances. Miners in a mining pool will likely experience smaller rewards. Even if prices increase, the reward is being cut in half, but Bitcoin’s price is not likely to double unless there is a drastic market event.
Consumers
Consumers and retail Bitcoin users might be affected by a halving in the value of the Bitcoin they hold. Those who buy Bitcoin to make purchases will generally only be affected by price fluctuations, which may or may not remain similar to those before the halving occurred.
For those using Bitcoin for remittances, a halving means the same thing as it does for shoppers. The value of their remittances will depend on Bitcoin’s market price after the halving event.
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When is the Next Bitcoin Halving?
The next Bitcoin halving is projected to take place in mid-2028. It will reduce the mining reward from 3.125 BTC to 1.5625 BTC. To predict the date of the next halving, we can look at Bitcoin’s current block generation rate. Halvings occur every 210,000 blocks, and this interval is hard-coded into Bitcoin’s protocol to occur roughly every four years or every 2,100 blocks.
The precise timing can fluctuate based on variations in the network’s mining difficulty and changes in the total hashrate. As of October 2023, Bitcoin is producing blocks every 9.4 minutes. At this rate, the next halving would occur around April 2024, but this could change as the date gets closer.
Why Is Bitcoin Halving Important?
Halvings are important because they reduce the supply of new Bitcoin that is being introduced into circulation. The Bitcoin halving on May 11, 2020, reduced the block reward from 12.5 BTC to 6.25 BTC. The next April 19, 2024 event will cut the reward to 3.125 BTC. The next halving will occur in 2028, when the block reward will fall to 1.625 BTC.
The first Bitcoin block reward was 50 bitcoin. There have been four halvings since 2009. These halving dates were:
- Nov. 28, 2012, to 25 bitcoins
- July 9, 2016, to 12.5 bitcoins
- May 11, 2020, to 6.25 bitcoins
- April 19, 2024, to 3.125 bitcoins
As of May 2024, about 19.7 million bitcoins were in circulation, leaving just around 1.3 million to be released via mining rewards.
Should You Invest in Bitcoin During a Halving?
Many investors have high expectations for halvings because, in the past, prices generally trended upward after the event. 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. Whether you invest in Bitcoin before or after a halving depends on market conditions, outlook, and risk tolerance level. The latest halving was unique among halvings in that Spot Bitcoin ETFs were approved by the U.S.
Market Volatility and ETF Influence
Securities and Exchange Commission (SEC) only a few months before the event. Investors and speculators flocked to these new exchange-traded funds (ETFs) or moved capital from the once-popular Bitcoin ETF Trusts to them. The market shifted again one month after the halving, and prices dropped.
The ETFs experienced significant outflows at the beginning of May, followed by similar inflows in mid-May. The market became more optimistic about Ether ETF, and Bitcoin’s price soared.3 It seems that, at least for the foreseeable future, anyone can only guess what the market will do.
What Happens When Bitcoin is Halving?
The term “halving” as it relates to Bitcoin concerns how many tokens are rewarded—the amount is cut in half. This simulates diminishing returns while increasing scarcity, which is intended to raise demand.
What are the Bitcoin Halving Dates?
|
Halving |
Est. Halving Date |
Block Reward |
|
#1 |
November 28, 2012 |
25 BTC |
|
#2 |
July 09, 2016 |
12.5 BTC |
|
#3 |
May 11, 2020 |
6.25 BTC |
|
#4 |
April 20, 2024 |
3.125 BTC |
How Many Bitcoin Halvings Are Left?
If Bitcoin maintains its schedule of one halving every four years, there are 29 halvings left (as of 2024). Bitcoins can be divided into smaller denominations called satoshis, equivalent to 0.00000001 bitcoin. Block rewards will drop to this amount in 2136, and the last satoshi is expected to be awarded right before the last halving in mid-2140.
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Will Bitcoin Halving Increase Price?
Halving is a process that halves the Bitcoin reward for mining new blocks in the blockchain. This reward started at 50 bitcoins in 2009 and has halved three times so far, with the latest halving occurring on May 11, 2020.
The next halving is scheduled for April 19, 2024. Each halving reduces the rate at which new bitcoins are released into circulation, creating a supply shock that helps fuel Bitcoin’s price increases.
Bitcoin Halving Events and Their Historical Impact on Price Surges
Many complex macroeconomic factors and market sentiment influence Bitcoin’s volatile price movements; history shows that a significant price increase has followed each halving event.
After the first two halving events, Bitcoin’s price surged within 12 to 18 months.
- When the first halving occurred in November 2012, Bitcoin traded below $12 per coin.
- By December 2013, its value had skyrocketed more than 100 times, reaching approximately $1,150.
- The 2016 halving anticipated Bitcoin’s massive rally in 2017, which saw prices nearing $20,000.
- Just nine months after the May 2020 halving, Bitcoin hit an all-time high, surpassing $64,000, before settling into a lower trading range.
These historical patterns suggest that halving events creates supply constraints that often contribute to price increases as demand either remains steady or grows. Each halving is seen as a pivotal moment in Bitcoin’s market cycle, often leading to bullish price action in the following months.
Factors Influencing Bitcoin’s Post-Halving Price Movements
This consistent pattern lends credibility to the idea that Bitcoin’s boom-and-bust cycles are shaped by the significant restriction of new supply through halving, coupled with the exponential growth in user adoption and demand. However, predicting the exact timing and scale of price surges after a halving is difficult due to many variables affecting market sentiment.
It’s essential to note that Bitcoin’s price increases or decreases depend on various factors. For example, media attention, the growing public awareness of Bitcoin, the introduction new coins in the market, government regulations and restrictions, and the availability of derivatives and futures contracts have opened doors for more serious and formal investments.
Speculation Before Each Halving
In the months leading up to a halving event, speculation in Bitcoin markets rises significantly. Expecting the upcoming supply shock and its expected positive impact on prices, traders often view a price increase as inevitable. This fear of missing out before the halving creates a feedback loop of speculative activity and scheduled discussions about the changes halving might bring, each reaching various conclusions.
These market gatherings and price hikes are often unstable, and the Bitcoin market usually experiences corrections before the actual halving takes place. These predictions make Bitcoin halving a measurable focal point for generating buzz. As traders prepare for the supply reduction, opportunists capitalize on the anticipated price increase.
Price Increase After the Halving
The real test happens 12 to 18 months after the halving when Bitcoin’s appreciation must materialize to justify the speculative bubbles formed beforehand. This balance is achieved if Bitcoin adoption grows rapidly after the block reward is halved and miners reduce selling pressure. However, if Bitcoin adoption stalls or buyers retreat from the market due to post-halving consequences, all the optimism and predictions of a positive future for the Bitcoin market collapse.
If demand remains stable or continues to grow, the supply shocks caused by halving create downward pressure. In the best-case scenario, demand acceleration coincides with supply reduction, which economists view as an ideal formula for increasing valuations.
How Does Halving Affect Miners?
For miners, halving significantly reduces revenue until mining difficulty adjusts a few weeks after the event and new, upgraded hardware becomes available to help reduce costs. When the block reward is halved, miners see their income drop by 50% overnight unless Bitcoin's price increases substantially to offset this decline. This puts pressure on operators with high electricity costs or inefficient hardware, forcing them to retire older rigs to avoid mining at a loss.
In summary, halving events not only creates major price speculation but also significantly impact miners, pushing the industry toward greater efficiency and leading to a long-term rebalancing of the market.
How Halving Events Drive Efficiency and Reshape the Mining Industry
Smart mining companies manage costs by upgrading to advanced ASIC hardware before the next anticipated halving. Until innovation brings cheaper energy sources, this process puts significant pressure on the industry. As profit margins shrink, halving can drive out mining companies needing more advanced equipment and access to inexpensive energy.
Only efficient, large-scale miners will survive these repeated shake-ups. The survival of efficient miners ultimately enhances the network's overall security because only the most advanced miners with the highest hash rates will remain to secure the chain.
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