Halvings have happened in November 2012, July 2016, May 2020, and April 2024. Time will tell how mining companies fare following this latest halving. But Rasmussen is betting that big players will continue to expand and utilize the industry’s technology advances to make operations more efficient.
This event also generates hype because, historically, bitcoin’s price has made new all-time highs following halvings. For example, on the day of the 2012 halving, its price was roughly $12. Following the halving, it entered a strong uptrend, hitting $266 by April 2013. Similarly, on the day of the May 2020 halving, its price was roughly $8,700. After the halving, it entered another strong uptrend that ultimately topped out at roughly $69,000.
Miners do the work of maintaining and securing the Bitcoin ledger and are rewarded with newly minted Bitcoin. Bitcoin is among the most highly valued and widely traded forms of cryptocurrency in the world. In 2024, bitcoin continued to increase in value reaching new highs as investors flocked to the digital currency. Among the drivers for the increased demand and price of bitcoin is the easier availability of bitcoin as an investment class, with the debut of Bitcoin cryptocurrency exchange-traded funds.
As of Friday night, bitcoin’s price stood at $63,907 per CoinMarketCap. That’s down from the all-time-high of about $73,750 hit last month, but still double the asset’s price from a year ago. So long as demand remains the same or climbs faster than supply, bitcoin prices should rise as halving limits output. Because of this, some argue that bitcoin can counteract inflation — still, experts stress that future gains are never guaranteed. Nodes on the Bitcoin network contain transaction history and are responsible for validating new transactions.
Much of the credit for bitcoin’s recent rally is given to the early success of a new way to invest in the asset — spot bitcoin ETFs, which were only approved by how to buy aptos U.S. regulators in January. A research report from crypto fund manager Bitwise found that these spot ETFs, short for exchange-traded funds, saw $12.1 billion in inflows during the first quarter. Meanwhile, JP Morgan analysts predicted a significant price correction following the halving, arguing that an increase in mining difficulty could push smaller miners out of operation. Mining difficulty is as much as 20% less than anticipated, they wrote—in turn, bringing down the production cost of mining. It’s also possible that the reward mechanism for Bitcoin could change before the final block is mined.
When Is the Next Bitcoin Halving?
On the other hand, while the halving reduces the reward for miners, it equally lowers the supply of new coins without reducing the demand, notes Patricia Trompeter, CEO of cryptocurrency miner Sphere 3D Corp. Bitcoin halving is when the reward for bitcoin mining is cut in half. Presently, more than 19 million bitcoins have already been mined, leaving exchange cryptocurrencies safely with this new application under 2 million left to be created. The bitcoin protocol periodically reduces the number of new coins earned by miners in a process called halving. Block rewards are part of the blockchain’s automatic process of validating transactions and opening new blocks (called mining). Miners, participants who compete in a race to solve a cryptographic puzzle, are given new bitcoins if they are the first to solve it.
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For instance, Marathon Digital Holdings, one of the world’s largest mining firms, increased its Bitcoin holdings to 16,930 and its fleet of Bitcoin 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). Also, remember that, in general, bitcoin and other cryptocurrencies are highly volatile, and may be more susceptible to market manipulation than securities. Moreover, crypto holders do not benefit from the same regulatory protections applicable to registered securities, and the future regulatory environment for crypto is currently uncertain.
- Following the halving, it entered a strong uptrend, hitting $266 by April 2013.
- As of May 2024, about 19.7 million bitcoins were in circulation, leaving just around 1.3 million to be released via mining rewards.
- Block rewards are part of the blockchain’s automatic process of validating transactions and opening new blocks (called mining).
- “One of the most important features of bitcoin is its limited supply and issuance mechanism,” says Bruce Fenton, CEO of fintech company Chainstone Labs.
- The halving is a critical component of Bitcoin’s economic model, while the impact of each halving event has proven to be significant for the broader cryptocurrency markets.
The Bitcoin Halving Explained: Why It Matters For Investors
For example, one factor that could significantly impact the situation is how much energy and mining computers will cost in the 22nd century. In contrast, crypto advocates believe bitcoin is a currency that will maintain or grow its value over time, meaning anyone can buy and hold without fear of inflation. Better-prepared miners have likely laid the groundwork ahead of time, perhaps by increasing energy efficiency or raising new capital. “This time around, I think miners are better prepared,” Dessislava Aubert, Director of Research at the crypto analytics firm Kaiko, argued. Aubert suggested that miners have been building liquidity ahead of the halving, and that the sector has “consolidated significantly over the past year.”
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Rasmussen notes that he’s seen some predict gains reaching as high as $400,000, but the more “consensus estimate” is closer to the $100,000-$175,000 range. Similarly, in the wake of the 2020 halving, Bitcoin’s price increased from just over $9,000 to over $27,000 by the end of the year—but in the two months following the halving, the price didn’t break $10,000. At the time of the June 2016 halving, the price of Bitcoin was around $660; following the halving, Bitcoin continued to trade horizontally until the end of the month, before falling as low how does cash app work and is it safe as $533 in August.