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Bitcoin’s fourth halving has been completed – what should we expect now?
Here we are, the fourth Bitcoin halving has just occurred, and everyone in the crypto industry is wondering what the event will bring, not just for the largest cryptocurrency by market cap, but for the entire crypto space.
On Friday night, the network reduced the incentives its miners receive for confirming blocks. Everyone was prepared for the event designed to slow down the issuance of coins and maintain Bitcoin’s scarcity characteristic. Halving events are crucial to maintaining Bitcoin’s digital gold status characteristic because the asset is already volatile enough and requires adjustments to remain a store of value. Its price has been quite volatile before the halving, and investors are keeping an eye Bitcoin Price Prediction then to try to figure out where cryptocurrency might go next.
Crypto enthusiasts believe that mechanically the halving event should not have any impact on its price in the short term, but some large value fluctuations could happen in the following months.
If you’re looking to add Bitcoin to your investment portfolio after the halving, this article can help you figure out if it’s the right decision for you.
Discovering Halving Cycles
Since the Bitcoin White Paper was released, the crypto industry has been aware that halving events are mandatory to halve miners’ revenue and cement the currency’s status as a scarce asset. Its goal is to rationalize industry investment and network hashrate to improve the long-term operator experience, so while some miners may find this scary for their profits, it will only bring benefits to those who manage to survive the process.
Every four years, the network halves to reduce the rate of introduction of new coins into circulation by 50%. The mechanism aims to prevent inflation from affecting Bitcoin and control the pace at which the total supply of Bitcoin is released. If the ecosystem checks all scheduled halving events, the last bitcoin will be mined around 2040.
The latest halving event saw miners’ rewards cut from 6.25 to 3,125 bitcoins per block, which directly affects the overall supply. ViaBTC halved the block on April 20 and it was the 840,000th block added to the network. The miner earned around 40 bitcoins, worth more than $2.6 million per block.
A brief history of all Bitcoin halvings.
2012 – the first halving
The first halving on the network happened on November 28, 2012 and reduced the reward to 25 BTC. On the date of the event, the price of BTC was US$12.35, but reached US$964 a year later.
2016 – the second half
The second halving event occurred on July 9, 2016 and reduced the reward to 12.5 BTC per block. The price skyrocketed from $663 to $2,500 in one year.
2020 – the third halving
On May 11, 2020, the third halving event reduced the reward to 6.25 BTC, and the price was $8,500 at the time. In the following months, Bitcoin reached its peak and was valued at $69,000.
2024 – the fourth halving
The last halving event happened on April 20, 2024, and 1 BTC cost around $62,000. Only time can tell how much it will be worth in a year, but Bitcoin enthusiasts are sure it will reach new highs.
Should we expect a rise in Bitcoin?
History shows that the price of Bitcoin tends to increase in post-halving events and, if it does not increase immediately afterwards, it will certainly follow an upward trajectory in the following months. So far, there has been an increase for about seven months after the halving. However, it is essential to note that the market always heads towards a recession a year later because investors tend to sell their assets when they reach the highest possible price.
But crypto experts believe that Bitcoin could have a different trajectory now because it has already seen considerable increases in price even before the halving. This could mean that the cycle will be different this time or that the time period could be more compressed. Bitcoin, along with other cryptocurrencies, have just recovered from a bear market and reached significant values, so the price of BTC is close to record values.
However, it is quite challenging to say how high the price could rise, but everyone who holds BTC in their portfolios should be prepared for some volatility.
Is there a chance that the price of Bitcoin will not rise in the near future?
Some crypto experts are reticent to believe that Bitcoin will reach the high levels it previously reached because the US Federal Reserve no longer has the relaxed monetary policy it had in 2020. At that time, interest rates were much lower than at the time. High interest rates have led some investors to remove risky assets like Bitcoin from their portfolios.
However, uncertainty lurks above the crypto space because there are indications that the US Fed could cut interest rates by the end of the year. This means that investors can remain cautious for now and wait until rates drop to buy Bitcoin or other cryptocurrencies.
This Bitcoin halving is different, without a doubt
This event was surrounded by high expectations, considering that all other halvings triggered price hikes. Industry experts have debated whether the halving will be priced in or will cause a supply shock and trigger a spike in prices. Those who support the first theory claim that everyone is well informed about the importance of the event and that no experienced investor would undervalue cryptocurrency anymore. Those who support the second theory rely on the boom that Bitcoin has experienced every time it has experienced a halving event.
Regardless of which group you are part of, you know that this halving is different because it is the first time in history that the price of the coin has increased before the event.
The short-term effects are just around the corner, so we can only witness whether the network will consolidate further or whether it will follow a different trajectory than in the past.
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