The cryptocurrency market has established itself as one of the most prominent activities for trading and investing. Among all cryptocurrencies, Bitcoin stands out as one of the most popular and valuable globally, and not without reason. Its already high value has the potential to increase further this year due to Bitcoin's anticipated halving in 2024.
The Bitcoin Halving is a significant event in the crypto world, and it will happen again in 2024, something that is generating anticipation. In this article, we will explain what the Halving is, how it works, and provide all the relevant information you need to know about this great event.
What is the Bitcoin Halving? Why will it happen in 2024?
One of the fundamental characteristics of cryptocurrencies, and Bitcoin in particular, is their limited nature. These are not infinite tokens, but a finite amount, which contributes to their tendency to increase in value over time. A prominent example of this phenomenon is Bitcoin, which every four years experiences a reduction in its supply, an event known as the Bitcoin Halving 2024.
The Bitcoin Halving is a scheduled event that happens every four years (give or take), although it actually happens every time 210,000 blocks are mined, and it plays a crucial role in mining this cryptocurrency. In essence, the halving halves the amount of new Bitcoins generated, meaning that miners earn 50% less Bitcoin for the same effort put in.
All of the above is due to the fact that Satoshi Nakamoto, creator of Bitcoin, implemented Proof of Work for this cryptocurrency within his Whitepaper. The Proof of Work protocol is central to the Bitcoin mining process. This protocol involves the creation of new blocks through the solving of complex mathematical puzzles that can only be solved through an intensive process of trial and error.
For that reason, as Bitcoin block mining rewards decrease, prices naturally skyrocket. Less for the work itself, is the central idea.
The goal of this event is to influence the supply and demand of Bitcoin. As the supply of new Bitcoins decreases, demand is expected to increase, which could result in an increase in the value of each Bitcoin.
Why does it happen? Bitcoin was designed that way from the beginning. To help you understand it better, here are some reasons behind the halving:
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Regulation of Inflation: The Bitcoin halving is implemented to control inflation within the Bitcoin ecosystem. This is achieved by decreasing the rate at which new Bitcoins are generated, thus reducing the rewards per block mined. This measure seeks to preserve the long-term price stability and value of Bitcoin, contributing to the control of inflation.
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Scarcity and Controlled Supply: Bitcoin was designed as a scarce cryptocurrency of limited supply. Each halving makes Bitcoin's availability even more limited, which can influence its value. Scarcity can increase the perception of value and demand, potentially driving up its price in the market.
Bitcoin halving in 2024. When will it happen?
Since its birth in 2009, Bitcoin has gone through three major halving events, each with a significant impact on the cryptocurrency.
Bitcoin's first halving occurred on November 28, 2012. At the time, around 10,500,000 bitcoins were already in circulation, and the value of each coin was around $11. The year following this halving witnessed a dramatic increase in Bitcoin's value, multiplying a hundredfold.
The second halving occurred on July 9, 2016, marking another significant stage in Bitcoin's evolution and managing to position this crypto as an essential element in the modern economy
The most recent halving took place on May 11, 2020, and like previous events, it notably influenced the dynamics of the Bitcoin market. From here, Bitcoin's boom was remarkable, reaching its historical value.
As for the next halving, it is anticipated that it could happen in April or May 2024, although there is still some uncertainty about it. What is certain, however, is that this event will take place sometime in 2024, marking another milestone in Bitcoin's history.
The Halving and its first impacts in 2024
As mentioned above, the Bitcoin Halving is an event that has a strong connection to the increase in the price of this cryptocurrency and, indirectly, other digital currencies.
This phenomenon is perceived differently depending on the perspective: it can be considered a challenge for those engaged in Bitcoin mining, but as an opportunity for those engaged in trading.
At the beginning of the year and with a view to the next Bitcoin Halving, 2 conclusions have been developed:
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Impact of the Halving on Bitcoin Prices: This event directly influences the value of Bitcoin, both in the short and long term. Previous halvings have shown an increase in the price volatility of this crypto, resulting in significant changes in its price. In addition, many market players consider halvings as indicators of future uptrends in price, thus influencing expectations among investors.
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Influence on Market Sentiment: The Bitcoin halving tends to attract a lot of attention from market participants, which also has a considerable impact on the overall market sentiment. How investors perceive and react to Bitcoin during and after the halving can significantly influence trading strategies and decisions.