Bitcoin Halving 2024: Will it Drive BTC Price to $100k? | All You Need to Know

Bitcoin’s 4th Halving event will be executed on April 20, 2024 at block height 250,000, cutting down rewards issued to miners from 6.25 BTC to 3.125 BTC.

Perennially, Bitcoin price witnessed bullish performance ahead of previous halving events. But worryingly, in the 20-days leading to the Halving in April 2024,  crypto markets fell flat, shedding over $200 billion in market capitalization, largely due to escalating geo-political conflicts dousing investor confidence.

But zooming out, vital historical metrics reveal interesting trends that could see the BTC and the broader crypto market skyrocket again if the pattern repeat.

Here’s all you need to know about the 2024 Bitcoin Halving.

What is Bitcoin Halving

The Bitcoin (BTC) proof-of-work network issues rewards to miners who dedicate computing resources to validate transactions on the blockchain. To control inflationary impact, the reward is slashed at periodic intervals through the halving process.

Bitcoin halving refers to the event that reduces the rate at which new Bitcoins are issued by 50%. This halving event occurs after every 210,000 blocks have been mined, approximately every four years.

The primary purpose of the halving is to control inflation by reducing the pace at which new Bitcoins are introduced into the market; this design is a direct response to the inflationary tendency often seen in traditional fiat currencies, where governments can print currency without limits, leading to depreciation in value.

Each time a halving occurs, fewer new Bitcoins enter circulation. This creates a scarcity effect similar to that of precious metals like gold. Halving slows down the rate at which new coins are created, gradually reducing inflation over time.

Halving helps regulate BTC supply, mimicking the scarcity of valuable commodities like gold. It is critical to its monetary policy and potentially leads to possible price increases by reducing supply pressure.

Although reducing miners’ rewards could impact mining activity, the reduced supply might create upward price pressure if demand remains strong.

Bitcoin Halving History: How Does It Impact BTC Price?

There have been four (4) Bitcoin halving events. Historical data trends show that Bitcoin price has often increased tremendously in four-year cycles.

Notably, the Bitcoin boom cycles have seen BTC price hit a new all-time high before the next one.

The table below illustrates that since the first halving event in November 2012, BTC price increased by 5466.67%, 1216.42%, and 627.27%, respectively, leading up to the next cycle.

Two key factors have emerged major catalysts for this bullish Bitcoin price action after every halving event.

Firstly, the economic rationale behind Bitcoin’s halving is to preserve its value proposition and ensure its long-term sustainability. Miners dedicating resources to validate transactions despite declining rewards sends bullish signals to investors.

Halving events trigger a psychological response among investors, characterized by FOMO (fear of missing out). As the halving date approaches, anticipation builds within the cryptocurrency community, leading to increased media coverage and public interest.

This heightened attention often translates into greater buying activity as investors seek to capitalize on potential price gains. The combination of supply dynamics and investor psychology fuels a self-reinforcing cycle of price appreciation, contributing to the bullish momentum observed in Bitcoin’s price after each halving event

Secondly, the halving operates as a mechanism to manage the rate of new coin issuance, ultimately bolstering the digital asset’s scarcity and fostering an environment conducive to price appreciation.

How does Halving Impact the BTC Miners?

Bitcoin miners play a crucial role in maintaining and securing the Bitcoin Network. They validate new transactions and record them on the blockchain by solving complex cryptographic problems, a process known as ‘proof of work’. For this service, miners are rewarded with new bitcoins (block rewards) and transaction fees.

The halving event directly impacts miners’ incentives and profitability. In response, miners often upgrade to more efficient mining hardware to maintain competitiveness and profitability.

“When a Bitcoin halving occurs, the block reward they receive for their mining efforts is reduced by 50%. This decrease in rewards directly impacts the profitability of mining activities, especially for those with higher overhead costs.”

– Alex Chehade, General Manager of Binance FZE.

Generally, BTC Halvings incentivize technological advancements and efficiency improvements within the mining sector.  Some less profitable miners may exit the industry, leading to a temporary decrease in network hash rate until remaining miners adjust said Josh Gilbert, Market Analyst at eToro.

When is the next Bitoin Halving, and What to Expect?

Each Bitcoin halving occurs every time 210,000 blocks are added to the chain, approximately every four years, hence Bitcoin’s 5th halving will occur at block height 1,050,000 which tentatively slated for 2028.

And based on the historical patterns observed above, strategic investors will anticipate another significant price uptrend, possibly sending BTC prices above the $100,000 milestone. 

However, it is important to note that each halving cycle shaped by its unique dynamics.

For the 2024 cycle, institutional participation is unarguably the most dominant theme, with major catalyst Bitcoin ETFs, and Real-World Assets (RWA) and Asset Tokenization all driving billions of dollars in new capital inflows to the crypto markets.