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- 1 Bitcoin price depends on many factors and halving is one of them.
- 2 Bitcoin halving is the phenomenon of reducing BTC mining rewards to half
Given the past references, Bitcoin’s (BTC) price rally depends on many factors since the digital asset is still in its infancy. Even a small development or fluctuation in the macroeconomic level around the world can affect the sensitive trading price of BTC. However, Bitcoin’s halving is one of the most significant events that turned out to set the course of cryptocurrency. The next halving is around the corner and investors are anticipating a BTC price rally, but is it even going to happen?
The Bitcoin halving event gained popularity and eyeballs given the turnaround in the BTC trading price following it. Following the event, the price of the flagship cryptocurrency broke previous records and attained unprecedented heights. The current all-time high of Bitcoin price at above $69,000 was attained in November 2021, which is almost a year later of the last halving.
Since the inception of the first cryptocurrency, there have been four instances. The next halving is likely to take place in around the second quarter of 2024.
What is Bitcoin Halving?
Bitcoin halving is the phenomenon of reducing BTC mining rewards to half. Initially, after Satoshi Nakamoto created the cryptocurrency, the mining rewards were around 50 BTC in 2009.
The First Bitcoin halving took place in 2012 cutting down the reward to 25 BTC. The next halving in 2016 brought it down to 12.5 BTC and after 2020 halving, the existing mining reward stays at 6.25 BTC.
The upcoming Bitcoin halving will reduce mining rewards to 3.125 BTC.
Why is Bitcoin Halving Significant?
Every time a bitcoin halving event takes place, the price of crypto assets sees a massive pump in the months to follow. The price rallies in the past were followed by the events. With the pace of mining reward coming down to half almost every four years, it is likely to continue till year 2140 when the whole supply of 21 Million BTC will be in circulation.
Halving the mining rewards follows the notion that it will keep the Bitcoin price deflationary as the reducing mining rewards is inversely proportional to the crypto asset price. Every halving event slows down the pace of new BTC joining the current supply resulting in shooting up the demand and hence its price.
Bitcoin Halving Expected to Push Price Above $100K
Bitcoin bulls see halving as an event to bring BTC prices to unprecedented levels, as mentioned earlier. The next target of such bullish investors is at least above $100K, though some even think of the number to be way higher.
However, Bitcoin price usually stays neutral at the time of the halving event taking place. It generally picks up the pace gradually and hits its peak in the coming months.
For instance, the founder of the crypto analytics platform Decentrader, FlibFlib, stated on X that the expected target for Bitcoin is $180K. The analyst threw the number based on a reading of past Bitcoin halving events and price moments.
This time around, according to FlibFlib, the next rally could take a maximum of 18 months to reach another all-time high.
Yet there are other metrics in the play since a lot has been changed in the past years. The general interest in crypto shifted towards decentralized finance which is clearly visible through the significant market cap held by defi tokens.
The last peak of $69,000 took place during the phase of the COVID-19 recovery when the U.S. markets had abundant liquidity given the low Federal Reserve interest rates. In tightening the economy, the American Central Bank has increased the rates aggressively since 2022 and it continued till July 2024.
Currently, the interest rate stands at 5.25%-5.50%, and the Fed has not given any indication if it is done with raising the rates or moving forward with cutting down anytime soon.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
