Understanding Bitcoin Halving: What Traders Need to Know in 2024

Today, we're delving into a pivotal event in the Bitcoin ecosystem: the Bitcoin Halving. This event plays a crucial role in the economics of Bitcoin and has historically been a catalyst for significant market movements.

What is Bitcoin Halving?
Bitcoin halving is a scheduled event in Bitcoin's blockchain protocol that reduces the reward for mining new blocks by half. This halving happens approximately every four years and is a core part of Bitcoin's design to control inflation and mimic the scarcity of a precious resource like gold.

The Mechanics

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Frequency: Occurs every 210,000 blocks, roughly every four years.

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Purpose: To control the supply of new Bitcoins, ensuring a total of 21 million Bitcoins are released gradually over time.

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Impact on Miners: The reward for mining a new block is halved, affecting miners' profitability.

Historical Halvings and Market Impact

Since the birth of BTC, we have had so far three halvings (2012; 2016; 2020). Another Halving is on the corner, which is predicted to happen in the next 150 days (April 2024). So let's learn what each of those halving periods taught us, and what can we do to prepare for the upcoming halving?

2012 Halving
The first halving occurred in November 2012, reducing the reward from 50 to 25 Bitcoins. This event was followed by a significant bull run. As with the first halving, no one knew what to expect, so in the period before the halving, we had more of a stable sideways movement.

2016 Halving
The second halving in July 2016 saw the reward drop from 25 to 12.5 Bitcoins, leading to another period of price pumping. With people getting excited about halving and learning that last time it led to a nice ROI, people pushed prices up early (almost 2 months before the halving). However, the price has dropped by nearly 35% right after the halving.

2020 Halving
The most recent halving in May 2020 reduced the reward to 6.25 Bitcoins. This event preceded a historic bull market, pushing Bitcoin to new highs. Before that, we had a nice selloff where price got dumped heavily (more than 60%).
Each halving has been a precursor to a bull market: Which is logical as well!

What To Wait For Upcoming Halving: April 2024