Will halving BTC in 2024 bring a bull market?

TL;DR

🔹 BTC halving happens when the reward for mining Bitcoin is cut in half.

🔹 Even as demand rises, halvings bring down the rate at which new coins are created, lowering the available amount of new supply.

🔹 Previous halvings have been associated with intense boom and bust cycles that ended with prices higher than before the event.

🔹 According to the Bitcoin stock-to-flow ratio, Bitcoin will reach $100,000 by the end of 2024.




Introduction


Halving is a pivotal event on the Bitcoin blockchain, in which the reward for mining Bitcoin - and the supply of new ones—is cut in half. Each halving event reduces the inflation rate, pushing the BTC price higher. Bitcoin miners currently receive 6.25 bitcoins (BTC) for each successful block, but the next BTC halving in 2024, the block reward expectedly will be reduced to 3.125. As the block reward approaches zero, the impact of each halving will diminish over time. Investors anticipate a quick and robust recovery despite the current bear market being one of the longest and still going strong. That is why the 2024 Bitcoin halving is such an anticipated crypto event.

What is halving Bitcoin?

Halving is Bitcoin's method of imposing artificial price inflation by reducing the rate at which new bitcoins are created by half until all bitcoins are released. This reward system will continue until the proposed limit of 21 million coins is reached around the year 2140.

The reward for each block mined in the chain in 2009 was 50 bitcoins. Following the first halving, it was 25, then 12.5, and finally, as of May 11, 2020, 6.25 bitcoins per block.

Impacts of past BTC Halvings on Price

The patterns between BTC halving events have been relatively consistent. As miners earn less per block, Bitcoin's supply decreases, causing its price to rise. Over time, these price increases have been much more significant.

Consider the most recent Bitcoin halving. One Bitcoin was worth $8,787 on the day of the halving. A year later, a Bitcoin was worth $54,276, representing a 517% increase over the halving-day price.

That year was also not an outlier. The price of one Bitcoin increased by 506% from $647 in 2016, halving to $19,800 a year later. These booms are frequently followed by bust cycles.

Bitcoin lost 83% of its value between 2017 and 2018, falling to $3,250. Similarly, after the 2012 halving, prices soared in 2013, only to plummet 83% a year later.

2024 BTC Halving Event and the Projection of a Bull Run

If previous Bitcoin halvings are any indication, prices may rise in 2025 before falling again in 2026. Many experts predict that one Bitcoin will be worth more than $100,000 in 2025, when it likely peaks following the halving in 2024. More so, this prediction is consistent with the price projection from one of the reliable tools for forecasting bitcoin price, the stock-to-flow ratio.

As seen in the previous Halving cycle, the bitcoin price overshot the stock-to-flow ratio before settling and averaging along the stock-to-flow ratio. The Bitcoin stock-to-flow ratio currently indicates that Bitcoin will reach $100,000 by the end of 2024.

The CEO of Bitkub Capital Group Holdings, Jirayut Srupsrisopa, citing a Bloomberg report, asserted that the 2024 halving would usher in a "golden period" for the world's largest cryptocurrency.

He anticipates that 2024 and 2025 will also be profitable for the broader cryptocurrency market. However, digital tokens may experience a brief period of correction and volatility during the halving process, according to Srupsrisopa, co-founder of Bitkub.

Conclusion

Bitcoin halving has significant implications for its network. Investors can expect a price increase in the days leading up to and following the halving. Individual miners and tiny outfits may drop out of the mining ecosystem or be taken over by more prominent players, resulting in consolidation in their ranks.



Author - M. Olatunji, Gate.io Researcher
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