Restricting the supply of new bitcoin (BTC) entering the market using the “halving” process helps to maintain a level of scarcity, cementing bitcoin’s position as a means of exchange and a store of value. It also creates potential opportunities to predict what the effect on the price will be.
The Bitcoin halving is one of the most impactful events within crypto. The process restricts the flow of new bitcoins into the market and was instigated by Bitcoin’s creator Satoshi Nakamoto, who appreciated continuously creating more coins will lead to the devaluation of a cryptoasset.
What is the Bitcoin halving?
The “Bitcoin halving” explains a moment in time when bitcoin miners receive 50% fewer new coins as a reward for their work. It is a specific aspect of the Bitcoin blockchain and restricts the flow of new bitcoin into the market.
There have been four previous Bitcoin halvings and they will continue to occur until there are no more new bitcoin left to be released.
Tip: Halvings will take place until all available bitcoin is successfully mined. At current rates, this will be in 2140.
When is the next Bitcoin halving?
Each Bitcoin halving is scheduled to occur whenever a batch of 210,000 blocks are successfully mined. Given the current rate of production, this usually takes place over a four-year period, with the next Bitcoin halving predicted to take place in April 2028.
As mining rates are variable, it is usually only possible to know the exact date and time of the Bitcoin halving when the 210,000 block limit is closer to being reached.
For the upcoming Bitcoin halving, the total number of mined blocks will reach 950,000. When this happens, the block reward assigned to
| The previous four Bitcoin halvings occurred in 2012, 2016, 2020, and 2024: |
| Halving Year | Halving Date | Previous Rewards | New Rewards |
|---|---|---|---|
| 2012 | November 28th | 50 BTC | 25 BTC |
| 2016 | July 9th | 25 BTC | 12.5 BTC |
| 2020 | May 11th | 12.5 BTC | 6.25 BTC |
| 2024 | April 19th | 6.25 BTC | 3.125 BTC |
| 2028 (TBC) | April (TBC) | 3.125 BTC | 1.5625 BTC |
How does the Bitcoin halving work?
The Bitcoin halving works by cutting by 50% the amount of new bitcoin miners receive each time they are the first to solve a complex mathematical problem. That directly scales back the amount of new coins distributed to miners.
The Bitcoin halving schedule is predetermined, and written into the blockchain’s code to ensure that changes are implemented. The trigger for the halving taking place is based on the number of blocks mined rather than calendar dates. The next halving will take place when 950,000 blocks have been mined.
“Coins have to get initially distributed somehow, and a constant rate seems like the best formula.”
Satoshi Nakamoto
How does the Bitcoin halving affect the market?
Historically, the Bitcoin halving has had a significant impact on the wider crypto market. The event directly impacts the supply and demand of the world’s most popular cryptoasset and also raises the profile of bitcoin and the crypto sector as a whole.
Typically speaking, when the supply of an asset decreases, assuming the demand remains the same, its price should increase. While past events are no guarantee of future performance, this is what has happened to the price of bitcoin following the last four halving events.
In terms of the wider crypto market, other assets have previously shown significant correlation with bitcoin’s price movements. Therefore, the Bitcoin halving impacts bitcoin directly, as well as the value of most altcoins as a result.
How does the Bitcoin halving affect bitcoin investors?
Bitcoin’s four-year cycle, signposted by the halving process, acts as a trigger for inventors to track crypto prices during the pre-halving and post-halving period, looking for trading opportunities.
Because of past halving events, it is likely that increased levels of price
In addition, as the Bitcoin halving receives mainstream attention, there is also the possibility that new retail investors will turn their attention towards the crypto sector.
Final thoughts
Although the premise of the Bitcoin halving is relatively simple, it can trigger extreme price moves and initiate long-term price trends. Interested investors should consider the increased price volatility and factor this into their risk management strategy.
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Quiz
FAQs
- Do other cryptoassets have halving events?
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Yes, some other cryptoassets also experience halving events, although the Bitcoin halving is the most famous example. The halving process is an effective way of limiting the introduction of new coins into a circulating supply and has been adopted by a number of other networks, including Litecoin and ZCASH.
- How does the Bitcoin halving impact other cryptoassets?
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The price of bitcoin is the variable most influenced by the Bitcoin halving, but not every investor interested in the halving will trade bitcoin. Other cryptoassets, such as Litecoin, also undergo halving events and often experience renewed interest in the same way that bitcoin does when the halving occurs.
On the other hand, as the wider crypto market typically follows bitcoin’s price movements, at least in part, it is likely that any bitcoin price trends, as well as an influx of new investors, will impact the price of cryptoassets across the board.
- What are the risks associated with Bitcoin halving?
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The price of bitcoin typically becomes more volatile throughout the halving process as a greater number of investors take differing views on the prospects of BTC. There is often an expectation that Bitcoin will experience a growth in value, which is not guaranteed and could lead to investors over-committing funds to trades that are ultimately not successful.
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