The fourth Bitcoin halving is about to happen, and if past performance is any guide, there will probably be a post-halving spike in price.
Every four years or so, there is an event known as the “bitcoin halving,” in which 50% less bitcoins are given as mining incentives. 6.25 BTC is the current Bitcoin reward. That being said, the reward will drop to 3.125 BTC on the fourth halving.
Consequently, the quantity of Bitcoins in circulation decreases even further, leading to a spike in investor demand. The primary reason for this is that there is a limited quantity of Bitcoin—a maximum of 21 million coins can ever be in circulation.
There have been three Bitcoin halvings thus far, and the next one is anticipated to occur on April 19 or 20. The most recent halving of Bitcoin took place on May 11, 2020; the others occurred on July 9, 2016, and November 28, 2012.
The blockchain software of Bitcoin is preprogrammed to perform these halvings, which typically take place once every 210,000 blocks that are mined. It is exceedingly difficult to forecast the exact timing of the next Bitcoin halving event because of the ambiguity around the time required to mine the next 210,000 blocks after the last halving event.
On the other hand, a rough approximation can be derived from the typical mining time of one block. One Bitcoin block now takes 10 minutes on average to mine, and as of April 17, 834,327 blocks had been mined.
According to a Bitfinex research published on April 15, investors may be accumulating more bitcoin in expectation of a spike in value over the coming several months.
The number of bitcoin leaving exchanges has reached its highest level since January 2023 last week as the Bitcoin halving, which is anticipated to occur on Saturday, April 20th, approaches. Concurrently, there has been a sharp decline in the one-year-plus inactive supply, or the total amount of Bitcoin that has not been traded in more than a year. This suggests that there is a significant turning point in the market.
“On Friday, April 12, a net amount of 6,767 BTC exited centralised exchanges (CEXes), marking the largest outflow on a daily basis since January 2023. Face-value analysis of this trend indicates that investors are hoarding Bitcoin and putting their holdings in cold storage in expectation of future price gains following the halving, which reduces the reward for mining the cryptocurrency by half.
The behavior of Bitcoin holders today is similar to what was observed in December 2020, right before the market saw a major upswing. We might be going through a similar growth phase, based on this trend.
“Over the past month, we have seen long-term holders (LTHs) investors who have held their BTC for more than 155 days – actively selling off their coins at a rate of about 16,800 BTC daily.”
Will Bitcoin surge following the 2024 halving event too?
Typically, Bitcoin prices continue to surge for a good few months following a halving month, rising, on average, for seven months. However, this rally is also seen as a forewarning sign for what is inevitably a market crash or downturn, due to a number of investors, especially long-term ones, selling their Bitcoin holdings and cashing in on the post-halving gains.
On the other hand, analysts expect Bitcoin price movements to be slightly different following the upcoming halving, due to Bitcoin already having seen considerable surges, and even new record highs before the halving itself. As such, the entire price cycle that usually surrounds this event seems to have gotten a lot more compressed.
In an email, Reed Smith Partner Brett Hillis stated
“This cycle’s halving is exceptional. Although in the past the halving has caused a considerable price gain, Bitcoin is now not far from record highs.
“We might be in for some price volatility, but it’s hard to predict whether this could limit how high the price could soar. Under such conditions, the number of disputes in the cryptocurrency ecosystem may significantly increase.
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