The next bitcoin (BTC) halving is likely to occur in April 2024 and could have a dramatic impact on the crypto market. Discover everything you need to know about the next bitcoin halving – including what it is, why it’s happening and how you can trade it.
Each time Bitcoin goes through a halving, the rate of supply effectively halves too. When demand levels for an asset remain constant but supply is reduced, the asset tends to appreciate.
Traders may seek to exploit this dynamic by investing in Bitcoin ahead of next April’s anticipated halving, in hopes it will increase the value of their holdings.
How to Trade the Next Bitcoin Halving
There are three ways to trade bitcoin’s halving. You can speculate on the BTC spot or BTC futures prices using derivatives such as CFDs, invest in the recently approved 11 Spot Bitcoin ETFs and the ProShares Bitcoin Futures ETF, or buy the coins outright via an exchange. To trade the bitcoin halving with us:
Open an account or practise on a demo. Search for ‘Bitcoin’ in our platform. Open and monitor your position.
One of the main benefits of trading cryptocurrencies with derivatives such as CFDs is that you don’t take ownership of the underlying coins. This enables you to:
- Trade without an exchange account or wallet: with CAPEX.com, you could be set up and ready to trade in minutes. Please note while trading without an exchange account or wallet, you do not own or have any interest in the underlying asset.
- Go long or short: When you buy a cryptocurrency, you are purchasing the asset upfront in that hope that it increases in value. But when you trade on the price of a cryptocurrency or ETF holding crypto assets, you can take advantage of markets that are falling in price, as well as rising. This is known as going short.
- Take advantage of leverage: you can open a position by putting down a deposit – known as margin – to gain access to a much larger market exposure. Leverage enables you to gain a large exposure to a financial market while only tying up a relatively small amount of your capital. In this way, leverage magnifies the scope for both gains and losses.
Basics of the Bitcoin Network
To understand what a Bitcoin halving is, you must first know how the Bitcoin network operates.
The blockchain, which powers Bitcoin, is made up of a network of computers, or "nodes," that each run the cryptocurrency's software and store a partial or full history of all the transactions that have ever taken place on the network. In the Bitcoin network, it is up to each full node—a node that houses the complete history of transactions—to decide whether to accept or reject a transaction. The node checks the transaction's validity to accomplish it. Among these include making sure the transaction is within the required duration and has the right validation criteria.
Every transaction is given a unique authorization. This is only reported to happen when every transaction in a block has been approved. The transaction is disseminated to other nodes and attached to the current blockchain upon approval.
The stability and security of the blockchain are increased by adding more computers, or nodes. As of October 11, 2023, 16,841 nodes were expected to be running the Bitcoin code. Not all users of Bitcoin are miners, even though anyone with sufficient storage can join the network as a node and download the complete blockchain and transaction history.
Basics of Bitcoin Mining
The process of using computers or mining hardware to process and validate transactions on the blockchain network of Bitcoin is known as bitcoin mining. Proof-of-work (PoW) is the mechanism that Bitcoin utilises to verify transaction data. The reason it's called proof-of-work is that deciphering the encrypted hash requires effort and time, which serves as evidence that work was done.
The process of extracting precious metals is referred to as "mining," not mine in the literal sense. A block is closed and added to a mining queue after it is full with transactions. Bitcoin miners fight to be the first to discover a number whose value is less than the hash after it is queued up for verification. The encrypted data from the earlier blocks is all contained in the hash, which is a hexadecimal number.
Mining confirms the legitimacy of the transactions in a block and opens a new one. Nodes then verify the transactions further in a series of confirmations. This process creates a chain of blocks containing information, forming the blockchain.
What Is Bitcoin Halving?
Every 4 years, or after 210,000 blocks have been mined by the network, Bitcoin miners receive a block reward that is halved. Because it reduces the amount of newly created bitcoins issued into circulation by half, this event is known as the "halving."
The intended 21-million-coin cap will be achieved at some point in 2140, at which point this rewards program will end. At that point, network users will pay miners' fees in exchange for their processing of transactions. These costs guarantee that miners will continue to be motivated to contribute and maintain the network.
The reason the halving event matters is because it represents a further decline in the rate at which Bitcoin is created as its supply gets closer to being exhausted. 50 bitcoins were awarded for mining each block in the chain in 2009. Only roughly 1.5 million bitcoins remained to be released through mining awards as of October 2023, out of the approximately 19.5 million in circulation.
The Bitcoin Halving Cycle
The next bitcoin halving is expected to occur in April 2024, when the number of blocks hits 740,000. It will see the block reward fall from 6.25 to 3.125 bitcoins. The exact date of the halving is not yet known as the time taken to generate new blocks varies, with the network averaging one block every ten minutes.
Technological significance of the Bitcoin halving 2024
The halving cycle of Bitcoin is important because it distinguishes the cryptocurrency from fiat money by encouraging innovation and resilience in its native form.
The 2024 Bitcoin halving event is important because it will affect how quickly new Bitcoin is added to the market. The event will cause the payouts to drop from 6.25 BTC to 3.125 BTC, which can encourage miners to increase their productivity. Miners need to discover ways to streamline their operations when rewards diminish to stay profitable. This may spur technological development in mining equipment, leading to the development of more potent and energy-efficient mining rigs.
Unlike conventional fiat currencies, which have no upper limit, Bitcoin has a capped supply regulation that guarantees there can never be more than 21 million BTC.
Economic significance of the Bitcoin halving 2024
The 2024 bitcoin halving schedule is important considering the 2022 crypto winter and the 2023 economic slump. Over time, it limits the quantity of Bitcoin by slowing down its supply or creation. Gold-like scarcity applies here. The deflationary nature of Bitcoin draws in investors who are attempting to hold onto their money in a world where traditional currencies are losing value due to inflation.
In contrast to the subjective decisions made by central banks in conventional monetary systems, halving occurrences are predetermined, clear, and predictable. This consistency gives investors comfort, particularly during uncertain economic times. The strict monetary policy of Bitcoin, which is enforced via halving, appeals to those who are wary of the behaviour and policy changes of central banks.
A lot of gold enthusiasts think Bitcoin is a good investment. Gold has historically offered safety during economic downturns and protection against inflation. Bitcoin has comparable characteristics in its digital form. Bitcoin halving is preferred by those investing in gold because it lowers the supply, which is like gold mining. The idea that Bitcoin could play a similar role in the digital age is implied by the term "digital gold." Because both Bitcoin and gold are deflationary, events involving the halving of Bitcoin are noteworthy to long-term gold investors.
The History of Bitcoin Halving
The mining incentive, also known as the Bitcoin mining subsidy, was set at 50 BTC per block when the Bitcoin network went online in 2009. The miner rewards reduction scheme was hard coded into the Bitcoin code as part of the monetary policy by the anonymous creator of the cryptocurrency, Satoshi Nakamoto.
As a result, the block subsidy halving code will automatically run every 210,000 blocks, cutting the reward that miners will receive over the following four years.
Three halving events have taken place since its inception in 2009: the first in 2012, the second in 2016, and the most recent in 2020. As a result, the fourth halving will occur in 2024 at a block height of 840,000, and the fifth is anticipated to occur in 2028.
Event Date Block number Block reward Total new bitcoins between events Bitcoin launches 3 January 2009 0 (genesis block) 50 new BTC 10,500,000 BTC First halving 28 November 2012 210,000 25 new BTC 5,250,000 BTC Second halving 9 July 2016 420,000 12.5 new BTC 2,625,000 BTC Third halving 11 May 2020 630,000 6.25 new BTC 1,312,500 BTC Fourth halving Expected April 2024 740,000 3.125 new BTC 656,250 BTC Fifth halving Expected 2028 850,000 1.5625 new BTC 328,125 BTC
This Bitcoin halving countdown is not exhaustive. Bitcoin halvings will occur every 210,000 blocks until around 2140 when all 21 million coins will have been mined.
Impact of the Halving Cycle on Bitcoin’s Price
Since they have all followed a similar pattern, the historical Bitcoin halving chart provide insightful information. This is mostly because of inflation brought on by the lower introduction of new Bitcoin and the decline in mining profits.
1. Accumulation phase
Bitcoin users typically accumulate BTC pre-halving, causing a stagnation or slight uptrend in Bitcoin prices. This phenomenon preceded the first, second, third and current halving events, lasting between 13 and 22 months.
2. Participation phase
Past halving events triggered bull market phases lasting 10–15 months, with the price rising steadily and attaining all-time highs afterward. Only once (in 2016) did Bitcoin suffer a brief pullback, but it recovered and followed the characteristic bull phase trajectory.
3. Distribution phase
All the previous bull runs ended in a pullback or price correction phase that lasted 13-20 months, before entering the accumulation phase again.
While previous pre-halving periods have seen tremendous growth, early indications show this one may be different. Regardless, past performance is no indication of future results.
Is Bitcoin Halving Good or Bad?
Bitcoin halving has benefits and drawbacks. For example, halvings impact the rate at which new Bitcoin is issued, resulting in scarcity, which may propel the price of Bitcoin higher. This results in short-term price volatility for Bitcoin, which is caused by the uncertainty surrounding the halving event.
However, miners will only make half of what they were making to validate new blocks due to the Bitcoin halving, even if their energy and computation expenses will remain the same.
As fewer miners will be motivated to continue mining because of decreased revenue, the halving might also have a negative influence on the security of the Bitcoin network. In theory, this might leave the network vulnerable to a 51% attack since fewer users would have access to mining power.
Bitcoin Halving Countdown
- A Bitcoin halving event occurs when the reward for mining Bitcoin transactions is cut in half.
- Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply.
- The next bitcoin halving is expected to occur in April 2024, when the number of blocks hits 740,000. It will see the block reward fall from 6.25 to 3.125 bitcoins.
- The final halving is expected to occur in about 2140 when the number of bitcoins circulating will reach the theoretical maximum supply of 21 million.
- With CAPEX.com you can trade CFDs on Bitcoin spot and futures prices or trade and invest in any of the 12 spot and derivatives-based Bitcoin ETFs, including the first and largest U.S. bitcoin-linked ETF (BITO).