Bitcoin Halving 2020 vs 2024: Meaning, Dates, Prediction
In this article, we tell you when the Bitcoin 2024 halving will take place, what it means, and what are the predictions for the bitcoin price after halving.
Bitcoin halving is a landmark event for the cryptocurrency sector which consistently influences the currency's value and the broader market landscape. The significance of Bitcoin halving events lies at the core of Bitcoin's economic model and its value proposition as a digital asset.
The upcoming halving, expected in April 2024 at the 840,000th block, will decrease mining rewards from 6.25 BTC (equivalent to $418,800) to 3.125 BTC ($209,400). Historical data suggests that Bitcoin's value begins to rise, surpassing previous peaks around four to five months post-halving.
For instance, after the previous BTC halving on May 11, 2020, when Bitcoin stood at $8,750, its value soared by 430% and reached $61,300 in March 2021, five months later, breaking the previous ATH of $19,665 set on December 16, 2017.
In this discussion, we will delve into the effects of previous halvings and the expected outcomes post-April 2024, drawing comparisons to forecast future developments.
Understanding Bitcoin Halving
Let's start with a basic overview of Bitcoin halving and its significance.
Satoshi Nakamoto, the creator of Bitcoin, capped its total supply at 21 million coins to emulate the scarcity and value preservation seen in precious metals like gold, thereby preventing inflation.
The term "Bitcoin halving" describes the scheduled event during which the rewards for mining new blocks on the Bitcoin blockchain—essentially the process of validating transactions and adding them to the blockchain—are cut in half. This event occurs roughly every four years or after every 210,000 blocks have been added to the blockchain. The primary purpose of halving is to control Bitcoin's scarcity by slowing down the rate at which new coins are created and released into circulation, ensuring that only 21 million Bitcoins will ever exist. This mechanism, which gradually makes mining more challenging and costly, mirrors the finite nature of gold and aims to preserve Bitcoin's value over time.
Within the cryptocurrency community, halvings are generally seen as positive events for the long-term valuation of Bitcoin. The logic is straightforward: if the number of new bitcoins entering the market decreases while demand stays the same or rises, the price should naturally increase. Historically, each halving has led to a period of bullish price movements, though it's important to remember that Bitcoin's price is also affected by a myriad of other factors. If you want to explore this topic in more depth, we have a dedicated article just about that.
2020 Recap: The Last Bitcoin Halving
The most recent Bitcoin halving took place on May 11, 2020. As usual, the period leading up to the 2020 Bitcoin halving was marked by significant anticipation and speculation within the cryptocurrency market. In the past, Bitcoin halvings, such as those in 2012 and 2016, have typically been followed by notable price rallies.
Before the 2020 halving, which took place on May 11, the crypto market was in a state of recovery and mild volatility after the tumultuous events of March 2020, when the price of Bitcoin, along with global financial markets, plummeted due to the onset of the COVID-19 pandemic.
The ongoing global economic uncertainty, coupled with inflation fears due to massive fiscal and monetary stimulus, led many investors to consider Bitcoin as a viable store of value and hedge against inflation.
This period saw Bitcoin's price recover from lows around $5,000 in March to approximately $8,000 by early May, just before the halving.
Additionally, the 2020 halving coincided with the emergence of the decentralized finance (DeFi) movement, sparking further interest in the cryptocurrency sector. Although DeFi's core activities are primarily conducted on blockchain platforms like Ethereum, its burgeoning growth highlighted a rising interest in alternatives to the traditional financial system, indirectly favoring Bitcoin as the leading cryptocurrency.
The immediate aftermath of the 2020 halving did not see a dramatic price surge as some might have expected. From the $8,000 level in May, Bitcoin's price began to climb steadily throughout the second half of 2020. By the end of 2020, Bitcoin had reached prices over $20,000, and reached a new ATH of $61,300 in March 2021.
How is Bitcoin Doing One Month Before Halving?
As we approach the next Bitcoin halving, which is just a month away, the outlook for Bitcoin in 2024 is promising.
Recently, Bitcoin reached an unprecedented high, surpassing $69,000 last week and climbing above $72,000 on Monday morning.
This achievement marks a significant recovery from November 2022's lows, when increasing interest rates suppressed risk appetite, and the collapse of the cryptocurrency exchange FTX cast a shadow over the industry. At that time, investing in Bitcoin seemed risky and speculative.
However, Bitcoin's revival is not happening in isolation. We're witnessing a broader upward trend across various asset classes. Stock markets globally are nearing or at record highs, as are gold prices. Even bonds are recovering after a challenging two years. This optimism is fueled by excitement around artificial intelligence, a positive outlook on the global economy, and anticipations of more accommodating monetary policies.
This spike is largely credited to the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States. On January 11th, the U.S. Securities and Exchange Commission approved applications from 11 investment firms, including industry giants like BlackRock and Fidelity, to launch Bitcoin ETFs. These ETFs simplify the process for everyday investors to engage with Bitcoin, leading to a price surge following their approval.
The advent of spot Bitcoin ETFs has fundamentally altered the supply and demand dynamics for Bitcoin. Jaran Mellerud, the founder and chief strategist at Hashlab Mining, notes that in the last two months alone, U.S. spot Bitcoin ETFs have absorbed almost 3,000 BTC daily. This is more than six times the daily supply increase of 450 BTC expected post-halving, suggesting a significant boost in demand coinciding with a reduced supply due to the halving.
Final Words: So What Will Happen After 2024 BTC Halving?
As you can see, Bitcoin demonstrates promising signs of growth, with the upcoming halving potentially serving as another boost. While predicting exact outcomes remains a challenge, halvings are generally seen as positive triggers for Bitcoin's price in the long run.
Halving events generate significant market anticipation and speculation, often leading to increased trading activity and volatility in the months leading up to and following the event. Investors and traders attempt to predict the impact of the reduced supply on Bitcoin's price, leading to shifts in market sentiment that can have substantial effects on the cryptocurrency's value. This speculation and the attention it draws to Bitcoin can also attract new participants to the market, contributing to the long-term growth and maturation of the cryptocurrency ecosystem.
Each halving event has historically been followed by periods of increased price activity, although it's essential to acknowledge that many other factors also influence Bitcoin's price and it’s impossible to predict the exact outcomes.
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