The Bitcoin network has been a flagship currency for the entire crypto sector, helping the industry to progress beyond its infancy and become a competitive field in the global economy. Naturally, Bitcoin has a tremendous responsibility to stay transparent, valuable and robust, as it is a core pillar of the crypto landscape.
To ensure price stability and growth, Bitcoin has introduced an interesting concept - the BTC halving. This event cuts the Bitcoin reward from mining in half, giving miners less motivation to produce new blocks. The next bitcoin halving dates are slowly approaching us, and here's what you need to know to utilise this phenomenon in your favour.
What is the Bitcoin Halving Event?
The Bitcoin blockchain is the oldest operating network in crypto. It still uses the mining rewards and proof-of-work protocol to generate new blocks of data representing new Bitcoin currency units.
Therefore, miners are still the main force behind the new block production, receiving mining rewards for their efforts. Bitcoin is also capped at 21 million units, which creates a scarcity influence on the market.
However, the price of Bitcoin is still struggling to maintain a steady growth pace due to its speculative nature. Despite its creators' best efforts and BTC ordinals' creation, the flagship currency still depends on the investor hype to drive its growth.
If Bitcoin became extremely unpopular, customers would have no other benefits or utilities from the currency. Thus, price control is critical for Bitcoin, and halvings have been introduced to improve this situation.
How Does Bitcoin Halving Work?
The Bitcoin halving occurs every four years to battle the constant inflation and price uncertainty on the market. The general principle is to ensure that the block rewards from Bitcoin mining will decrease gradually and thus create the scarcity effect that will drive Bitcoin's price upward. As a result, Bitcoin's valuation will either increase or stabilise every four years in light of ever-present market volatility.
Bitcoin 4-Year Cycle Explained
But why every four years? Technically, the halving doesn't precisely happen every four years. Instead, it occurs whenever the Bitcoin network issues 210,000 new units, which is approximately 1% of the entire Bitcoin supply, capping at 21 million. The mission is to slowly decrease the mining rewards to follow the targeted timeline of Bitcoin issuance.
Additionally, the empirical Bitcoin price movements have showcased four-year price change cycle intervals. Bitcoin has appreciated dramatically in 2013, 2017 and 2021. Thus, the halving period coincides with the natural market shift cycles of Bitcoin and helps the currency to offset the possible bearish market trends.
Influence on Bitcoin Miners
As mentioned above, Bitcoin still uses the proof-of-work algorithm dependent on the mining system to validate new data blocks. In this workflow, miners are the main force behind producing new coins. They utilise computational power to solve complex mathematical equations and validate new units.
As a reward, they receive a certain amount of BTC tokens. As of today, three halving events have slowly cut these mining rewards in half. Naturally, lesser rewards encourage slower block production.
While this strategy has worked with varying success rates, the general trends have indicated BTC price spikes after every halving event. Thus, the halving mechanism has successfully persuaded miners to use less computational resources and slow down Bitcoin production.
To visualise this point further, let's take a look at the Bitcoin halving price chart through the years:
Bitcoin Halving Price Prediction
The optimistic forecasts for Bitcoin have indicated a possible Bitcoin rally coinciding with the upcoming crypto bull run. As per the trend forecasts, Bitcoin is set to reach an unprecedented milestone of $100,000 by the end of 2024.
While this target might seem unrealistic in the current conditions, with Bitcoin only reaching $42,000 in the last week, the empirical data suggests that the $100,000 goal is attainable.
The last Bitcoin halving date also occurred parallel to the 2021 bull run and produced a whopping 550% increase for the currency. Thus, the same growth projection might happen again, but it is more prudent to observe the market dynamics in the upcoming weeks to mitigate volatility risks.
How Will the Halving Influence Crypto Bull Run 2024?
The Bitcoin halving is destined to catalyse the emerging bull run spectacularly. Bitcoin has already reported impressive growth rates after the devastating 2022 crypto winter.
Thus, the combination of these two forces propelling Bitcoin toward new price heights can easily make Bitcoin the best crypto for 2024 in terms of growth upside.
Today, Bitcoin has already reached an unlikely milestone of a $ 42,000 valuation after a disappointing half-year in 2023. The current growth rate over six months is a promising 100%. Additionally, all market trends indicate that Bitcoin is set to make a big comeback in 2024. The introduction of BTC ordinals, new utilities and a revised mining distribution will positively affect Bitcoin's price trends.
However, it will be interesting if the general market trends support the crypto growth figures. Finally, the Bitcoin spot ETF mechanisms have arrived on the market, allowing traders to devise more complex trading strategies related to the flagship currency.
Critical Steps to Prepare for the Halving Event
For crypto and Bitcoin enthusiasts, the 2024 calendar year might be the one for the history books. The Bitcoin bottom reported in the half-year period looks like a distant memory, and the bull market seems imminent in the growing global economy.
However, there are two essential steps you should take into account to maximise the profits from the upcoming crypto boom.
Step # 1 - Analyse Market Sentiment and General Trends
Right now, the crypto scene is full of promising trends and developments. Aside from the latest Binance scandal, most leading companies show impressive growth numbers and signs of an emerging bull run. However, it is essential to remember that the crypto market is susceptible to many risks, both inside and outside the industry.
For example, the general interest rates and investment activities play a significant role in the development of the crypto sector. If retail investors have more liquidity and investment power through decreased interest rates and inflation, they will be more open to investing in crypto.
Political factors can also heavily influence the crypto scene, with governments deciding the laws and regulations. It is crucial to monitor these and other important factors to get ahead of the curve and understand where the market is heading in the short term.
Step # 2 - Invest Carefully and Diligently
It is easy to get swept up in the upcoming hype surrounding the entire market. The previous two bull runs witnessed empty hype that ultimately ruined the price growth at the end. Numerous investors poured in giant sums of money to ensure maximum profits with price appreciation.
This is not a prudent strategy since the crypto sector is still highly uncertain, and even the strongest bull runs could be reversed in weeks. Therefore, investments should be gradual and careful, ensuring your portfolio is not susceptible to a complete meltdown in the worst-case scenario.
Additionally, the halving event has always produced impressive growth numbers but has also shown equally concerning price decreases in the long term. So, making Bitcoin investments in tranches is advisable instead of pouring your entire free cash flow into the investment.
Final Takeaways
The Bitcoin halving countdown has started and promises to be the biggest one yet, helping the Bitcoin currency reach unprecedented valuations. However, staying patient and analysing the market prudently is essential since the entire crypto market could experience a crisis without any significant warning signs. So, exercising caution and investing within reason is best instead of following the market hype during the next Bitcoin halving dates!
