Bitcoin Halving 2024: When Is the Next Bitcoin Halving?

Bitcoin halving has historically fueled bull runs. But will this be the case in the spring of 2024? Before we dive into the debate, let's look at the timeline of the next Bitcoin halving to see how we might maximize investment opportunities.

Key Takeaways:

• Bitcoin halving takes place approximately every four years, with the next BTC halving scheduled for April 2024.

• Based on the track record of Bitcoin halvings, these events usually positively impact the prices of BTC and other cryptocurrencies.

• As a result of the upcoming Bitcoin halving of 2024, mining rewards will once again be reduced by 50%, yielding miners 3.125 BTC per block.

What Is Bitcoin Halving?

Bitcoin halving occurs after the mining of every 210,000 blocks, or approximately every four years, reducing by half the number of bitcoins rewarded for verifying one block of transactions. Miners were originally awarded 50 BTC per block before the first halving event in 2012. Thus, the three subsequent halvings have resulted in a current block reward of 6.25 bitcoins. This process limits Bitcoin supply, which increases scarcity, potentially driving up its value.

The first halving took place on November 28, 2012, so that miners were awarded 25 BTC per block mined. After the second halving on July 9, 2016, the reward was reduced to 12.5 BTC per block mined. On May 11, 2020, the most recent halving yielded a reward of 6.25 BTC, and the next halving event will occur in 2024. Subsequent halvings will continue until the last of 21 million bitcoins has been fully mined, estimated to be sometime in 2140.

What Is the Purpose of Bitcoin Halving?

The concept of halving Bitcoin was introduced as part of the original Bitcoin protocol. It encapsulated the idea of deflationary cryptocurrency, used primarily to control and reduce the supply of new Bitcoin entering market circulation. With a capped total supply of BTC, no entities, governments, authorities or central banks can create more Bitcoin. As a result, the idea of supply and demand economics comes into play.

Nevertheless, the Bitcoin protocol was designed this way for various reasons. Let's explore some of them.

Price Control: Deflationary

Bitcoin total supply is capped, and the protocol was designed to control the issuance of new Bitcoin into the market. Each halving event helps slow the issuance process to keep the coin's value stable and valuable over the long term. 

Essentially, since halving reduces the number of new BTC generated per block, it maintains steady demand and leads to a higher value for Bitcoin — a deflationary asset.

Market Dynamics

Halving has a palpable impact on the Bitcoin ecosystem. When the Bitcoin reward is halved, miners may perceive that their operations won’t be profitable anymore, due to the rising costs associated with them. Still, there are some miners who see this as an opportunity to increase their operations because it will reduce competition from less productive miners.

Regardless, the speed at which a Bitcoin block is mined won’t be affected. The protocol has an automated system in place that’s resistant to changes in mining dynamics, so the difficulty of verifying a transaction is maintained at a steady rate.

History of Bitcoin Halving

Following is an overview of the three previous Bitcoin halving events:

According to the expected Bitcoin halving schedule, the next Bitcoin halving will occur within 234 days of this article's publish date, with an estimated ETA of April 16, 2024. The data shows 35,223 blocks remain to be mined.

What Happened in the Last Bitcoin Halving?

When analyzing past post-halving booms, it’s clear that they’ve created increased volatility around Bitcoin. The chart below shows Bitcoin’s inflation rate, indicating that for each halving this rate is lowered as the total number of issued bitcoins increases.

This statistic implies that these payments reduce the influx of new Bitcoin to enter circulation, which introduces supply and demand economics into the system.

In 2011, the inflation rate of Bitcoin was at 50%, falling sharply to 12%. After the subsequent halving in 2012, it further declined to a range between 4–5% by 2016 (and 1.74% as of today). Based on the history, each halving event that’s taken place has triggered a surge in market activity. As the inflation rate continues, each of these halvings have increased the value of BTC, inciting an upward price trend for BTC.

Here's an overview of BTC price performance, both pre- and post-Bitcoin halving:

Although bull runs may not occur immediately, it’s historically been proven that Bitcoin halving triggers market volatility slightly pre- or post-event.

How Will the 2024 Bitcoin Halving Affect Bitcoin's Price?

Bitcoin's hash rate (the amount of power miners use to validate transactions on the blockchain) has historically fluctuated. On May 3, 2020, less than two weeks before the third Bitcoin halving, it hit a record high.

The higher the hash rate and mining reward, the more secure the Bitcoin network. Thus, it’s increasingly difficult for rogues to launch a 51% attack (controlling over 50% of the network's mining hash rate). However, a higher hash rate also means it's harder to mine new blocks, thus making it more difficult to create new Bitcoin.

Higher mining difficulty requires miners to buy more sophisticated equipment to mine cost-effectively — and forces miners who can't afford to do so out of the industry. This was the case in the aftermath of the last two halvings. It has previously taken miners up to a year to acquire more sophisticated mining equipment , and it’s expected to take a similar amount of time in 2024. In the meantime, the hash rate is expected to decrease.

As the hash rate once again increases with the acquisition of new mining hardware, miners will hold onto their bitcoins in anticipation of selling them off during the bullish price spikes that will occur as a cumulative effect. These price spikes occurred around a year or so after the previous three halvings, most noticeably last time during the legendary bull run of 2021.

In theory, there’s a correlation between the hash rates and price of Bitcoin over the long term. In the short term, up and down spikes in both the hash rate and price of Bitcoin seem inevitable. Let’s look at a couple of expert perspectives on what occurs as a result of Bitcoin halving events.

Key Figures Weigh In on the Bitcoin Halving

With the Bitcoin halving fast approaching, we believe a short-term pullback is highly likely immediately post-halving, as traders begin taking profits.

— Bitcoin researcher Lennard Neo, quoted May 7, 2020 in an article in Forbes

The halving has been on everyone's radar screen for a long time and as such, the effect on markets should already be factored into the price of BTC. The halving may affect the profitability of some miners, but we expect at this point that every miner has already adjusted their business models.

— Scott Freeman, co-founder of financial services firm JST Capital, speaking to Cointelegraph on April 27, 2020 [Note: Many within the crypto world disagree, asserting it's impossible for the halving event’s price on markets to have already been priced in.]

Can I Make Money From BTC Halving?

Making money from Bitcoin (BTC) halving is possible. However, it isn’t guaranteed, and it comes with risks.

Traders make money during BTC halvings through speculation and investment. If you believe that the price of Bitcoin will rise due to the halving event, you can potentially invest in BTC before the halving and sell after the cryptocurrency's price rises. The logic is simple: as the reward for miners drops, the supply of new bitcoins decreases. With fewer new BTC entering circulation, demand may stay the same or continue to rise, potentially increasing Bitcoin's price.

For example, after the 2016 halving the price of Bitcoin went from around $650 to $2,518 within a year. Similarly, after the 2020 halving, Bitcoin increased in value from $8,750 to approximately $30,000 by the end of the year, and then skyrocketed to nearly $65,000 in April 2021.

However, it's important to note that many factors influence Bitcoin's price, and halving is just one of them. Other factors include market demand, investor sentiment, regulatory news and macroeconomic factors. Therefore, while Bitcoin halvings historically have often led to price increases, it’s not guaranteed to happen every time. As the saying goes, past performance is no guarantee of future results.

How to Trade BTC Halving

Since the Bitcoin halving is expected to take place in 2024, there’s still time for traders to speculate on asset prices. In the meantime, one of the easiest ways to trade Bitcoin is to invest in options or spot trading. 

Alternatively, investors can invest in derivatives to speculate on Bitcoin price movements without actually owning the underlying coins. 

Bitcoin Options

Bitcoin options exist similarly to Bitcoin futures in the form of derivatives. These contracts essentially give investors or traders the right to buy or sell Bitcoin at a given price and specific expiration date without owning the underlying asset. Depending upon a trader's analysis, they can choose to execute a call option, in which they buy an agreed-upon amount of Bitcoin at a particular price and date. Alternatively, they can opt for a put option that gives the contract owner the right to sell Bitcoin at an agreed-upon price at a predetermined time. 

Bitcoin options trading is seen as a preferred mode of accumulating or buying Bitcoin because the cost incurred only involves the premium. This gives traders leverage to take on more speculative positions, regardless of price swings and market movement. 

Trade Bybit Bitcoin Options

Bitcoin Spot Trading 

A user can choose to buy Bitcoin before the next Bitcoin halving through a direct purchase of the asset on a crypto exchange. There are plenty of ways a user can get their hands on BTC via direct purchase, using their credit card or bank transfers. 

Alternatively, some traders prefer to buy or exchange one crypto asset for another on the spot market. For example, purchasing BTC/USDT on the spot market involves an immediate purchase or exchange of USDT to BTC at current market rates. 

Trade BTC/USDT on Bybit Spot

Bitcoin Derivatives Trading

Bitcoin derivatives trading involves buyers and sellers exchanging an underlying crypto asset at a predetermined price and date. Traders can bet on the price movement of cryptocurrencies without owning them.

• Futures Contract: This is a standardized agreement to buy or sell an underlying asset at a predetermined price on an agreed-upon date in the future. Futures contracts can be used for both hedging and speculative purposes.

• Forwards: Similar to futures, forwards are contracts that involve an agreement to buy or sell an asset at a specific price on a future date. However, forwards are traded over-the-counter (OTC, rather than on centralized exchanges), which can make them less liquid than futures. They're also more customizable and private in nature, typically tailored to meet the needs of the parties involved.

Trade BTC/USDT Derivatives

The Bottom Line

Awareness of the Bitcoin halving schedule can help traders and investors anticipate and speculate on Bitcoin's future price. Bitcoin halving has historically fueled bull runs, but this isn’t a guarantee of future scenarios. Traders must be aware of political and economic situations, and the crypto landscape in general, before investing in digital assets. Even though there’s generally speculation that the Bitcoin mining industry will be affected by the next Bitcoin halving, it’s just that: speculation. We recommend traders do their due diligence before investing in any financial assets, including those within the newer and more volatile realm of cryptocurrency. 

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