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Impact of Bitcoin Halving on Price

by Anamta bnn
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Bitcoin halving is an event where the number of Bitcoins mined per block is halved. The current rate of Bitcoins being mined for every block added to the blockchain is 6.25 BTC. This count will be reduced to half in April 2024 when the next Bitcoin halving is said to take place. This mechanism is designed to keep Bitcoin deflationary. Bitcoin halving events will continue to happen once every four years. The supply of Bitcoin is going to be 0 in the year 2140 when the last Bitcoin block is created. This will cap the total supply at 21 million.

How Does Halving Work?

Bitcoin is regarded as one of the most decentralised assets with no intermediaries having control over its supply dynamics. The logic for releasing new Bitcoin into circulation has been embedded into the blockchain since its inception. Bitcoin transactions are coded onto the Bitcoin blocks, and the miners validate these transactions and receive Bitcoins as a reward. These Bitcoins which are received by the miners are released into the supply. The protocol of the Blockchain automatically halves the mining rewards after every 210,000 mined blocks. 

Does Bitcoin halving increase the price?

Bitcoin’s characteristic which makes it a remarkable asset is based on its controlled supply, rarity and decentralised nature. These three aspects are cornerstones of the Bitcoin tokenomics. This makes Bitcoin very different from traditional assets and even most crypto tokens. Historically we did observe that Bitcoin halving has a positive effect on the price. But this does not happen immediately. 

For instance, during the 2016 halving event, Bitcoin was priced at approximately $650. Subsequently, the BTC value held steady and experienced a decline in the ensuing months. However, by the end of 2017, the price of Bitcoin surged to surpass $20,000. Likewise, in 2020, following the halving event, the BTC price maintained stability at around $9,000 but later skyrocketed to $27,000 by the year’s end. The bullish momentum of Bitcoin in 2020 was influenced by various factors, primarily attributable to decreasing interest rates and an augmented influx of credit into the financial markets post the COVID crisis. This was the period where central banks steeply reduced interest rates to encourage economic activity and as a result of that, we saw most markets take a bullish turn. However, we must also understand that historical observations cannot fully predict the future. Investors must weigh in all the factors affecting the larger market and consider their financial circumstances before taking a position in the crypto markets.

When is the next Bitcoin halving?

The next Bitcoin halving event will occur in 2024 when the mining reward will be reduced to 3.125 BTC for each block mined.

Conclusion 

2023 has been an exciting year for crypto with the broader market showing good gains. This positive momentum can likely continue in 2024 given that macroeconomic factors support the market. 2024 will be a pivotal year for crypto as several institutional investors are showing interest in launching ETFs. These developments coupled with the Bitcoin halving event will hopefully propel the markets forward in the years to come.

How to Buy Bitcoin in India?

You can seamlessly buy Bitcoin in India through ZebPay, India’s oldest crypto exchange. Join the millions of traders using ZebPay and start your crypto journey. ZebPay’s extensive features such as Quick Trade, Exchange, Lend and CryptoPacks enable you to build a robust portfolio while helping you gauge your risk and reward. Download the ZebPay App through the Play Store or the App Store and enjoy seamless crypto trading on the go.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.