[TL；DR]:
The Bitcoin halving is a major event that occurs every four years on the Bitcoin network, with the most recent expected to occur at the end of April 2024. Understanding what it is, how it operates, and its impact on the price of Bitcoin is crucial.
Looking back at history, it is not difficult to find that after each halving, Bitcoin has started a strong upward trend.
The consensus of halving a bullish outlook has been fully validated in the past, but the price of Bitcoin is still influenced by various internal and external factors, requiring multiple considerations and analysis.
Introduction
Recently, there has been hot news on blockchain media about the 200-day countdown to Bitcoin halving. Based on the most recognized consensus among people compared to Bitcoin, the value of Bitcoin has once again been highlighted in the current lackluster market situation. ETH/BTC has hit new lows, and BTC's market share has quietly climbed to 51%. Can the upcoming halving market allow Bitcoin to take off again? How should we rationally view halving? This article will explain one by one for everyone.
What is the Bitcoin Halving Mechanism
The block generation time of Bitcoin mining is dynamically adjusted based on computational power and mining difficulty. According to Nakamoto's design, a new block is excavated every 10 minutes, and the mining reward is halved every time 210000 blocks are reached.
According to the latest data monitoring from Gate.io, it has been less than 200 days since the fourth Bitcoin halving.
Satoshi Nakamoto hopes to provide Bitcoin with a gradually accepted buffer process while maintaining its differentiation from fiat currency inflation issuance through a constant total amount and gradually halving it. Although the rewards given to miners will be halved, as the acceptance of coin holders increases, miners can receive sufficient compensation for the Bitcoin halving from trading fees.
According to the rules, it is not difficult to calculate that it takes approximately 4 years to generate 210000 blocks.
Figure 2 Source: bitcoinblockhalf.com
From the past trend of coin prices, although the coin returns of miners will relatively decrease after each halving, triggering more intense competition for computing power and posing great challenges to miners. But after each halving, the price of Bitcoin will rise tens or several times, which helps to compensate for the loss of miners' coin quantity.
The reason for this is that the halving has resulted in a significant reduction in the circulation supply of Bitcoin, which has strengthened its scarcity compared to fiat currency.
In short, the Bitcoin halving can reduce its inflation rate, ensuring that Bitcoin is gradually distributed over time. The consensus on the rise brought about by this halving mechanism is increasingly recognized by investors and has created the magical feature of a four year bull/bear market.
What Does Halving Bring?
Looking back at history, it is not difficult to find that after each halving, Bitcoin has started a strong upward trend.
The first Bitcoin halving occurred on November 28, 2012, with mining rewards reduced from 50 BTC per piece to 25 BTC per piece, and then the coin price surged from $12 to the end of November 2013, reaching a maximum of $1,163.
The second halving occurred on July 9, 2016, reducing the mining reward to 12.5 BTC per block. Similarly, the currency price started a strong upward trend, rising from $650 on the halving day to $19,858 in mid December 2017, an increase of up to 30 times.
The third halving occurred on May 12, 2020, with the reward for each block reduced to 6.25 BTC, with a currency price of $8,810 on that day, and finally reaching a historical high of $69000 on November 10, 2021.
Table 3 Source: Gate.io Research
Let's take a closer look at the relationship between Bitcoin halving and the highest price in the subsequent bull market, as shown in the following figure.
Figure 4 Source: Pantera Capital
It is obvious that since the halving, Bitcoin has experienced a magnificent bull market. However, after the halving, the time of each peak shows a marginal increase, and the increase in coin prices is actually a marginal decrease, indicating that Bitcoin is increasingly evolving towards more mature asset classes.
Will the fourth halving in 200 days still push Bitcoin prices to a higher level?
Conjecture on the Fourth Bitcoin Halving
Many well-known analysts and institutions have made predictions about the currency price after halving next year.
CoinDesk, a cryptocurrency research company, predicts that the price of Bitcoin will reach $600000 by 2024.
Cryptocurrency analyst Michaël van de Poppe predicts that the price of Bitcoin will reach $500,000 by 2024.
Citibank predicts that the price of Bitcoin will reach $600,000 by 2024. The bank believes that Bitcoin will become a more mainstream accepted asset, leading to price increases.
Credit Suisse Bank predicts that the price of Bitcoin will reach $200,000 by 2024.
An analysis by Blockware Solutions suggests that the highly anticipated Bitcoin halving in 2024 may trigger a price surge, potentially pushing its value to a staggering $400,000.
Industry renowned analyst PlanB predicts that the price of Bitcoin will be reduced by $500,000 in the next halving cycle (there may be significant positive and negative errors).
However, we still need to look at the market calmly. Some views suggest that 20 million fully circulated Bitcoins have been mined, and compared to the total of 21 million, the supply increment of halving is not enough to trigger a significant supply-demand imbalance. Therefore, the logical basis for a bull market triggered by a halving market may no longer exist, and the starting point will be greatly discounted.
Furthermore, unlike previous market trends, the crypto market will complete a halving for the first time in a tightening financial environment, and the lack of external liquidity may become an important obstacle to token prices.
In addition, compared to the 2017 ICO boom and the 2020 DeFi Summer, there are currently no signs of a bull market catalyst in the crypto market - new technologies and products that are sufficient to drive industry development, which is also an urgent problem to be solved.
Overall, the consensus of halving bullish prices has been fully validated in the past, but Bitcoin prices are also influenced by various internal and external factors, such as legal policies, community narratives, liquidity imbalances, and the Black Swan incident. Regardless of whether the coin price will continue to follow the historical trend of halving soaring, we should recognize that the crypto market represented by Bitcoin has high volatility (although Bitcoin's volatility is also gradually weakening), and should always maintain an optimistic attitude, rational planning, and participate in investment based on thorough research (DYOR).
We will continue to monitor the expected positive trend of Bitcoin halving in 200 days, and Gate.io will continue to follow market trends to provide more valuable insights for everyone.
Introduction
What is the Bitcoin Halving Mechanism
What Does Halving Bring?
Conjecture on the Fourth Bitcoin Halving
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