After The ETF Approval, The Next Bitcoin Halving Is Approaching

Bitcoin, the largest cryptocurrency in the world, has been seeing considerable gains over the past year after a difficult period in 2022 when accumulated losses nearly reached 70%. As the prices began climbing up again, investors started looking into where to buy Bitcoin once more to consolidate their portfolios. It’s not just the fear of missing out at play, though, but also the fact that a bullish run is imminent. Apart from the recent ETF approval, which arrived on January 10th, 2024, around a decade after the first application, the incoming Bitcoin halving will affect prices as well, especially over the long term.

The Halving 

Bitcoin halving events occur roughly once every four years. They aim to reduce the rate at which new coins are generated and earned by miners on the blockchain. Every time the halving occurs, the rewards are slashed by half. With the next halving estimated to take place around the middle of April, miners are looking to gain rewards of 3.175 BTC per block, a considerable decrease compared to the 6.25 BTC levels that have been in place since May 2020.

In the beginning, the rewards were at a whopping 50 BTC for each block, but it’s important to remember that the price point was considerably lower in the early days of digital gold. The point of the halving is to drive and promote scarcity, the feature that keeps Bitcoin at the top of the crypto food chain in the first place. Scarcity means the coins are rarer than the average altcoin, making them naturally more valuable to own.

Only a fixed amount of Bitcoin will ever be mined, and after that level is reached, investors will have to continue trading with the amounts they already own.

Anticipation 

Bitcoin is far more reliable and stable than the other cryptocurrencies, yet it is nonetheless subjected to considerable fluctuations. It is still a decentralized asset, and despite its steady entrance into the world of mainstream finance, it remains somewhat at the edge of it. That means that it is more vulnerable in the face of fluctuations and that the investors who want to protect their portfolios and holdings must be aware of these shifts.

That’s because the impact of halving events on the overall market can be pretty substantial and has implications for the larger cryptocurrency space as well. While entirely accurate predictions are impossible given the ever-changing nature of cryptocurrencies, investors often look to the events of the previous halvings to gain insights. Historically, they fostered considerable growth, albeit not immediately. It takes a while for the gains to begin showing, typically anywhere between six and twelve months.

The all-time high levels of 2021 that have not yet been surpassed occurred because of the halving of 2020. But the challenge is to keep the momentum and ensure they can start a path to growth or at least maintain a certain level for longer instead of plummeting as they did in 2022.

2012 And 2016

The first halving to ever occur took place on November 28th, 2012, and sliced rewards to 25 Bitcoin. At the time, the Bitcoin price was a mere $13, but over the following year, it peaked at $1,174, a staggering growth performance. Yet, it remained mostly unnoticed as BTC was still very young; therefore, the world of mainstream finance didn’t think there was any reason to pay attention to it. However, it still became something of a marketing tool for those who wanted to advertise it.

The next halving occurred on July 16th, 2016. Block rewards were lowered to 12.5 coins. At the time, the price was lower compared to the highs of the previous halving but still retained much of its strength at $664. But after the halving, a new peak was achieved, which placed Bitcoin at $20,000. At this point, investors were also becoming knowledgeable about altcoins. A large part of the hype was also because of the ICO boom, the initial coin offerings.

The Ethereum blockchain was a pioneer in this area, and by this point, the world was already becoming less suspicious of virtual assets. However, some ICOs turned out to be scams, causing controversy and making the market earn an unsavory reputation.

2020

2020 was a challenging year, as the arrival of the COVID-19 pandemic didn’t only cause mayhem for the healthcare system but also for the financial world. It was also the time of Bitcoin’s third halving, on May 11th, 2020. Block awards reached 6.25 coins in rewards. At the time, the price of Bitcoin stood at $9,734. The record-breaking all-time high of 2021 arrived the following year, with the value reaching $69,045. After the collapse of 2022, the prices never regained these values, and Bitcoin is still consolidating to return to that level.

2020 was also the year the first company CEOs began holding Bitcoin on company balances. The price surges also caused stock values to rise, and other businesses and entrepreneurs started to follow in their footsteps. With the integration of exchange-traded funds, engagement levels are expected to be even higher. ETFs allow trading to be much easier and straightforward, so risk-averse companies and investors can trade crypto without having to own the coins.

The Future

Most of the predictions for the 2024 halving follow an optimistic pattern. Both investors and researchers expect the prices will continue to escalate. Some have even estimated that in 2025, Bitcoin will reach the elusive $100K level. Many also believe that digital gold would have had no issue getting to it already had it not been for the difficulties of the regulatory pressures. Towards the end of the year, even higher values could be achieved.

That means Bitcoin will write history over the next few years. The morale is high at the moment, but investors must remember patience remains an essential virtue when operating in this landscape. Be sure you’re aware of the fluctuations and the possible risks to ensure the gains will be far more numerous than the losses.

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