By
Temitope Olatunji
April 26th, 2024
Unlike previous halving events, which are usually accompanied by Bitcoin reaching a new all-time high, the crypto asset has already hit a new ATH this month ahead of the event.
With the month of March drawing closer to an end, the countdown has begun for the most anticipated event in the crypto industry: Bitcoin halving 2024. Analysts estimated the network could undergo its next halving event between April 19 and 20 this year, making it 30 days away from today.
The event is expected to significantly impact the entire digital asset market and Bitcoin (BTC) price trajectory. However, here is what you need to know about it.
What Is BTC Halving?
Bitcoin halving is a pre-programmed event scheduled to occur on the layer 1 blockchain every four years or after every 210,000 blocks are mined. This year, the upcoming halving will occur at block height 840,000.
During the halving, Bitcoin miners’ reward for validating transactions and securing the network is cut in half. This reduction in mining rewards is designed to control the issuance of new BTCs in circulation and ensure that the total supply of Bitcoin, which is 21 million, remains limited.
The first-ever halving took place on November 28, 2012, four years after the protocol’s launch in January 2009. At the time, the block reward for miners was reduced from 50 BTC per block to 25 BTC per block.
So far, the network has undergone four halvings, including the upcoming one next month. During the event, miners will receive rewards of 3.125 BTC per block, compared to the 6.25 BTC they received in 2020.
Historical Impact of Halving on Bitcoin Price
Historically, Bitcoin halving events have significantly impacted the price of BTC.
In the months leading up to the halving, there is increased speculation and anticipation in the market, which can drive up the price of Bitcoin. After the halving occurs, there is usually a period of price consolidation followed by a bull run that often leads to a new all-time high (ATH) for Bitcoin’s price.
For example, the last halving in 2020 was followed up with the 2021 bull market, which saw the price of BTC reach nearly $ 70,000 with up to $1 trillion in market value.
Ethereum (ether), the second-largest digital asset in the industry, hit an all-time high of $4,379. Other alternative cryptocurrencies (altcoins) gained popularity, including meme coins. The entire value of the crypto industry peaked above $3 trillion for the first time in the history of the emerging market.
The move ushered in new crypto enthusiasts into the industry, leading to the massive adoption of BTC. Countries like El Salvador even made the crypto asset legal tender in September 2021, becoming the first nation to do so.
That same year, Elon Musk joined the crypto bandwagon by adopting Dogecoin (DOGE). Similarly, interest in the non-fungible token (NFT) sector skyrocketed in 2021 when an artist known as Beeple, Mike Winkelmann, turned his artwork into an NFT. The digital artwork, dubbed “Everydays: The First 5000 Days”, was sold for $69 million.
What to Expect in the Upcoming Bitcoin Halving 2024
However, the upcoming event could be different from other cycles in the past. Unlike previous halving events, which are usually accompanied by Bitcoin reaching a new all-time high, the crypto asset has already hit a new ATH this month ahead of the event.
Bitcoin surpassed its previous highs of $69,000 to hit over $73,000 last week, deviating from the typical pattern seen in previous halving cycles.
The early price surge has been attributed to various factors, including increased institutional adoption, macroeconomic conditions, and growing mainstream acceptance of Bitcoin. Additionally, the surge has been attributed to the new approval of Bitcoin spot ETFs in the market.
Due to this new trend, analysts have cautioned investors to be careful as there is no clear pattern indicating how Bitcoin could react immediately after the halving event, especially given the significant differences in market conditions compared to previous halvings.
Earlier this week, analysts at Rekt Capital said that Bitcoin is approaching a critical phase known as the “Danger Zone.” The market experts claimed that Bitcoin was known to retrace at this phase, days before the halving took place.
“Historically, Bitcoin has performed pre-halving retraces 14-28 days before the halving,” said the analysts.