What is bitcoin halving and how will it affect BTC’s price?

Roughly, once every four years, the Bitcoin network experiences a halving event. This event impacts the earnings of miners — those who generate new BTC — as well as the network’s inflation rate, issuance speed and the price of the leading cryptocurrency. Discover how halving will influence the crypto market and whether we should expect BTC to reach $100,000 after it.

What is halving?

Halving, programmed by BTC creator Satoshi Nakamoto, means that the reward for mining a new block on the Bitcoin network is cut by half. This decrease of the reward occurs automatically after 210,000 blocks are added which is approximately once every four years.

The halving’s main goal is to control the emission of the cryptocurrency and curb inflation. In total, 21,000,000 bitcoins can be mined. The last block is expected to be added in 2140.

Its limited supply is the main difference and advantage that Bitcoin has over fiat currencies. For instance, the US Federal Reserve issued more than $3 trillion in 2020 which caused serious concerns from investors. A possible rise in inflation in fiat currencies contributed to Bitcoin attaining the status of a reserve asset in 2020–2021. Analysts at JPMorgan Chase even stated that BTC could become an alternative to gold, and in March 2021 their opinion was confirmed by a Bloomberg report.

Three years after the bitcoin halving

As shown on CoinMarketCap, a year after the third halving, bitcoin has shown steady growth. In November 2020, BTC broke its 2017 price record, reaching $19,749. Since the second half of December 2020, bitcoin has set new records almost daily. This trend continued into 2021 as well. In January, BTC’s price hit $41,900, and on 14th April 2021, the cryptocurrency set a new all-time high at $64,863.

As for Bitcoin’s market cap, during the last year, it’s increased more than six times — from $158 billion to $1 trillion. In terms of market value, the cryptocurrency surpassed giants such as Facebook ($867 billion), Tesla ($605 billion) and Alibaba ($601 billion). Moreover, according to The Block, the number of active bitcoin addresses has increased from 47 to 50 million since the third halving.

Of course, the halving was not the only thing that influenced the BTC price. Among the reasons for its price growth, the following factors can be identified:

• Economic crisis due to the coronavirus pandemic.
• Increased interest from major institutional players in buying BTC, including MicroStrategy, Tesla, Square, Galaxy Digital Holdings, etc.
• Integration of crypto technologies by financial giants such as PayPal, Visa, Mastercard, BNY Mellon, Goldman Sachs, Revolut, etc.
• Greater regulatory certainty regarding cryptocurrencies.

After reaching record highs in the spring of 2021, BTC experienced a sharp drop in the summer, with its price in July falling below $30,000. The first cryptocurrency only recovered by the end of the fall: in November 2021, it rose again above the level of $65,000, but lasted there for a short time. The price decline continued throughout 2022, with BTC dropping to $36,000 in January, $20,500 in June, and below $16,000 in November. In 2023, BTC rebounded and stabilised between $20,000 and $30,000.

>>> Follow the link to find out what to expect from the upcoming halving