Bitcoin Halving 2024 - Will History Repeat Itself With A Price Surge?

From January 2023 to August 2023, Bitcoin's average price was around $30k. However, from September 2023, the price of the world’s renowned cryptocurrency dropped to $27k. This downturn made the investors furious, doubting if the bearish trend would continue to rule the market in 2024.

On the other hand, 2024 is expected to be the year of Bitcoin Halving, when its mining rewards are reduced by 50%. In 2020, when the last Bitcoin Halving occurred, the block reward was reduced to 6.25, resulting in 900 BTC creation per day. This scarcity of Bitcoin production resulted in a hysteric increase in demand with an epic Bitcoin price surge.

Comparing the past Bitcoin Halving events, we discuss the prospect of this digital gold in the coming Bitcoin Halving of 2024. Read on to make an informed judgment in this halving event!

The Concept Of Bitcoin Halving

Bitcoin Halving is fundamental in ruling how new Bitcoins supply and circulate. Any new or old Bitcoin investors need to grasp this basic concept. First, you must understand that Bitcoin works through a decentralized network of computers (nodes); these nodes validate and save every transaction on a Blockchain.

But do the nodes work on their own? No, the nodes are maintained by miners. Miners are responsible for protecting the network and validating activities on these nodes. They earn rewards through new Bitcoins and transaction fees as they perform their job. In this way, the miners get their pay for doing their jobs.

However, every 210,000 blocks, or roughly once every four years, the network that governs Bitcoin holds a phenomenon known as "Bitcoin halving." In this instance, the quantity of Bitcoins paid to miners as remuneration is cut in half. Initially, miners received 50 BTCs for each block they solved. However, this was reduced to 25 in 2012. The last halving occurred in 2020, counting Bitcoin rewards to 6.25 per block.

For The Miners

However, some questions come to our mind: why is there a need to halve the rewards of a miner? Wouldn't it make them less motivated to secure the network? What's in it for miners?

As we know, Bitcoin was created as a deflationary virtual currency with an economic model of supplying only 210000 Bitcoins. Scarcity contributes to its value appreciation, unlike traditional fiat currencies, whose supply is at will. If the number of Bitcoins per block remains at 50 or more than that, it could lead to several challenges. Naming a few, inflation, reduced security, centralization risk, and economic model preservation.

The surviving bitcoins grow in worth as the quantity of new bitcoins shrinks over time. Miners often have a longer-term perspective and anticipate that the decrease in new supply will be compensated by a rise in the value of the bitcoins they earn. This anticipation encourages miners to continue securing the network.

Historical Analysis Of Past Bitcoin Halving 2012, 2016, & 2020

By analyzing the past Bitcoin Halving events, we conclude that they follow a pattern. After each halving event, the industry witnessed a bull market where the price of Bitcoin surged with increased demand. Staying true to its nature, halving events define the core characteristics of Bitcoin’s economic model, i.e., scarcity and deflation.

The 2012 Bitcoin Halving

November 28, 2012, marks an important event in the cryptocurrency landscape. As the first Bitcoin Halving happened, it offered many questions, raising the market's curiosity.

Before halving, the miners received a sum of 50 Bitcoins per block as a reward, while after halving, they got 25 Bitcoins. Initially, this halving event had no visible impact on the market price of Bitcoins. Nonetheless, the months before the halving witnessed notable increases in the price of Bitcoin, and this trend persisted throughout.

The coin's worth climbed consistently yet slowly at the start of 2013. In April 2013, the price appreciation kept pace, leading to an increase in autumn 2013, recorded as $1,100. The entire 2014 and the start of 2015 were low for Bitcoin as prices hit $152. Later, in October 2015, the coin gained momentum and continued a steady growth till the next halving event.

The 2012 halving marked a significant step for Bitcoin, proving that the cryptocurrency's economic model was functioning as intended. The reduced supply due to the halving contributed to increased demand and the price surge.

The 2016 Bitcoin Halving

9 July 2016 is yet another important date in the history of Bitcoin Halving. This event showcased the success of Bitcoin’s deflationary economic model. By the model, the incentive was cut in half to 12.5 BTCs for each block. In the months leading up to the 2016 halving, there was a palpable sense of anticipation, fueled by the knowledge that the event would reduce the rate of new Bitcoin issuance, creating a scarcity effect.

Traders and investors speculated on the potential price impact, contributing to a pre-halving price rally. The post-halving period saw Bitcoin's price continue its upward trajectory. The reduction in the block reward supply coincided with heightened demand, resulting in a bull market. Bitcoin's price, around $650 before the halving, experienced sustained growth in the subsequent years, eventually reaching new all-time highs. This price surge validated the belief that Bitcoin halvings could profoundly impact the market.

As the event gained media attention, mainstream interest in Bitcoin surged. This expanding audience included retail investors, institutions, and traditional finance players, reflecting Bitcoin's evolving role as a digital asset with investment appeal.

The buying habits of consumers changed as a result of the 2016 halving. With the reduced supply of new bitcoins, many investors and holders adopted a longer-term perspective. The idea that Bitcoin was a store of value and a hedge against inflation gained traction, contributing to a growing "HODL" (holding) culture.

The recognition and acceptability of Bitcoins, along with other digital currencies, rose fast in 2017, drawing many new players to the market for digital currencies. This, in turn, resulted in an 'ICO bubble,' which drove interest in Bitcoin even more as numerous ICOs took it.

The 2020 Bitcoin Halving

The 2020 Bitcoin halving, which took place on May 11, 2020, was a momentous event that had far-reaching implications for the cryptocurrency market and consumer behavior.

Similar to previous halvings, the Bitcoin market experienced a significant rally in the months leading up to the 2020 halving. Traders and investors anticipated the event, which would reduce the block rewards from 12.5 to 6.25 bitcoins per block. This anticipation contributed to a bullish sentiment, and Bitcoin's price surged from around $7,000 at the start of the year to over $10,000 just before the halving.

The supply shock, caused by the halving, combined with increasing institutional interest and macroeconomic uncertainty, fueled a prolonged bull market. Bitcoin surpassed its all-time high, reaching above $40,000 in late 2020 and climbing even higher.

The 2020 halving brought Bitcoin and cryptocurrencies into the mainstream consciousness. Media coverage of the event and the economic uncertainty caused by the COVID-19 pandemic piqued the interest of retail investors, institutions, and traditional finance players. It was seen as a potential hedge against inflation and economic instability. Post-COVID, the concept of trading bots like Bitcoin Code also gained momentum, making it further easier for crypto investors to get Bitcoins in their portfolios.

The 2020 halving was particularly notable for the significant influx of institutional capital into the Bitcoin market. High-profile endorsements from companies like MicroStrategy and Square and the entry of Wall Street firms illustrated a growing acceptance of Bitcoin as a legitimate asset class and store of value.

It emphasized the Bitcoin market's ongoing development. Established financial institutions, such as Fidelity, offered custody and trading services for Bitcoin. Additionally, regulatory clarity and increasing adoption by traditional financial players contributed to a more robust market infrastructure.

Speculations For The 2024 Halving

Significant price surges have historically accompanied the Bitcoin halving events, and it's natural for the crypto community to speculate about what might happen during the 2024 halving. While predictions are interesting to consider, it's crucial to approach them with caution due to the inherent volatility of the cryptocurrency market. As the past has shown, Bitcoin's price movements can be influenced by many factors, and these projections should be taken as entertaining scenarios rather than ironclad forecasts.

These historical trends indicate that with each halving event, the percentage increase in Bitcoin's price decreases from the previous increment. If this pattern continues, a projected 200% increase for the 2024 halving, while less than previous events, could still lead to significant price appreciation.

As the virtual currency industry expands, it could grow less subject to severe price movements. The 2024 halving's impact on market behavior may differ from previous halvings due to the market's evolution.

Random occurrences, sometimes known as "black swan" events, may significantly influence the economy. Be prepared for unexpected developments that could influence Bitcoin's price and adoption.

Making assumptions about the 2024 Bitcoin Halving should be done with prudence and a thorough awareness of the dangers involved. Additionally, stay updated with the latest news and analysis from reliable sources to make informed speculations as the 2024 halving approaches.

Final Thoughts

Bitcoin's halving events are key moments in the cryptocurrency's history. As we approach the 2024 halving, historical patterns suggest a potential for a similar bull market. However, the crypto landscape is highly speculative and influenced by various factors.

Consequently, caution is recommended since previous success does not indicate future outcomes. The 2024 halving promises to be another significant milestone in Bitcoin's journey, reflecting the evolving nature of the cryptocurrency market.

The 2024 halving event will undoubtedly be a pivotal moment in Bitcoin's ongoing journey and a reminder of the dynamic and ever-changing nature of the digital currency market.

Cryptocurrency