Bitcoin Halving 2024

Bitcoin Halving 2024: Everything You Need to Know

Bitcoin Halving is among the most significant events in the world of cryptocurrencies. Ever since the first Bitcoin block was mined in 2009, the price has consistently shown a positive trend within 150 days after each Bitcoin Halving event. The fourth Bitcoin Halving is scheduled for April 2024, during which the block reward for miners will be halved from 6.25 to 3.125 BTC. In preparation for this upcoming event, we’ll explain everything you need to know about the Halving.

 

With five years of experience under its belt, BISON witnessed the third Bitcoin Halving in 2020 and provided extensive coverage of it on our blog.

Countdown to the 2024 Bitcoin Halving

On average, a Bitcoin block is verified and confirmed by a miner every 10 minutes. The 2024 Bitcoin Halving will take place once the 840,000th block is reached. Satoshi Nakamoto chose a block time (the time it takes to confirm a block) of 10 minutes. However, the actual block time can vary due to the constantly changing computational power within the Bitcoin network.

Hash Rate & Block Time: Bitcoin Mining Explained

Definition: Hash Rate

The hash rate represents the computational power in Bitcoin mining, referring to the speed at which new transactions are processed and added to the blockchain. A higher hash rate means faster transaction processing and greater network security.

Let’s say that when the first block, also known as the Genesis Block, was mined in January 2009, the hash rate stood at 100, and it took precisely 10 minutes to mine. After a few days, new miners join the network, significantly increasing its computational power. Suddenly, the hash rate is at 500, leading to a quicker block verification. Instead of 10 minutes, a block is now solved in 9 minutes. To return to a block time of 10 minutes, the difficulty of verification adjusts every 2,016 blocks, or roughly every 14 days. The “puzzles” become harder to solve, requiring more computational power to solve a “puzzle” in 10 minutes. Two weeks later, the network, with a hash rate of 500, takes as much time as it previously did with a hash rate of 100.

 

Given the variations in block times, a simple calculation such as 840,000 * 10 minutes for pinpointing the 2024 Bitcoin Halving proves to be unreliable. Several estimates place the date between April 13 and April 24. Assuming the block time of 10 minutes is precisely maintained, the next Bitcoin Halving is anticipated to take place on April 21.

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Expected Halving Date: April 21, 2024, 01:06 a.m.

Explaining Bitcoin Halving: Fundamentals and Importance

Every 10 minutes, a block within the Bitcoin network is verified and added to the previous block, a process called mining, thereby validating all of its transactions. This process is followed by a secondary confirmation by nodes to ensure the miner has accurately solved the block.

Definition: Nodes

Nodes are points of connection. Each node contains a copy of the blockchain (transactions) and verifies transactions while ensuring that all participants adhere to the network rules.

For adding a block to the blockchain, which occurs through the supply of computational power, the miner receives a reward. Between 2020 and 2023, this reward was 6.25 BTC. This means that at a price of €30,000 per Bitcoin, a miner could receive Bitcoin worth €187,500. However, this requires being the fortunate miner who has confirmed the block through their mining work.

 

Every 210,000 blocks (approximately 1,450 days ≈ 4 years), the reward is halved. This process is known as “Halving.” In April, the 840,000th block will be reached, marking the completion of the fourth Halving. From then on, miners will receive only 3.125 Bitcoins per confirmed block for the next 210,000 blocks. This mechanism is embedded directly in Bitcoin’s code to limit inflation and distribute the currency over an extended period.

 

Worth noting: The third Bitcoin Halving occurred on May 11, 2020.

Hier wird angezeigt, wie viele Bitcoins es pro Halving gibt. Zu Beginn hat jeder Miner 50 Bitcoin für einen Block erhalten. Ab April sind es nur noch 3,125

The goal of Bitcoin’s creator, Satoshi Nakamoto, is artificial scarcity. Just like gold, which exists in a finite amount (though the exact amount is unknown) and unlike fiat currencies such as EUR and USD, which are not limited in quantity, there is a maximum of 21 million Bitcoins that will be issued and circulated gradually. Nakamoto’s aim (along with that of many Bitcoin advocates) with this mechanism is to create a currency immune to inflation that can serve as an ideal store of value.

The 2024 Halving: What’s Different?

Bitcoin Gains Increasing Recognition

The rapid development of AI tools like ChatGPT, Midjourney, and others within just a year highlights how much can change in the crypto world over four years. Unlike the slower-paced traditional financial sector, the crypto industry is marked by monthly advancements and innovations. In the past four years, well-known cryptocurrencies such as Bitcoin and Ethereum have optimized and expanded their code. Additionally, new cryptocurrencies have entered the market, establishing themselves with significant market capitalization. By the time of the last Bitcoin Halving on May 11, 2020, Bitcoin’s price stood at 10,000 USD — yet for many, it remained a rather unknown concept. This contrast underscores just how quickly recognition and value can shift in the world of cryptocurrencies.

Definition: Bull run

A bull run refers to a sustained price increase in the financial markets, especially with stocks or cryptocurrencies, accompanied by optimism, rising trading volumes, and positive market trends.

Bitcoin first gained significant media attention during the 2021 bull run, soaring to over 60,000 USD, which prompted the mention of cryptocurrencies in major daily newspapers and news broadcasts worldwide. This set a new stage for the upcoming Bitcoin Halving.

Institutional Participants and Regulation

With the EU’s MiCAR regulation, short for Markets in Crypto-Assets Regulation, cryptocurrency regulation has become standardized across Europe. Stricter regulation leads to greater business certainty for institutional participants wanting to engage in the crypto and blockchain space, thus reshaping the industry’s landscape. This, coupled with heightened interest from banks and investment firms, such as the endorsement of Bitcoin Spot ETFs in the USA, amplifies the impact of these institutional investors on the market. Bitcoin trading activity by large market participants has a leverage effect on the market that is difficult for retail investors to achieve. While it’s uncertain whether the increasing influence of institutional investors leads to more or less volatility, it’s evident that Bitcoin has become an established financial product in the market, playing an important role alongside stocks and gold in the international financial market, with its market movements closely monitored.

Market Development Since 2021 and Bitcoin ETF in the USA

After the 2020 Bitcoin Halving, the bull run lasted exactly one year. The price rose from 10,000 USD to over 60,000 USD. After a brief correction, the price surged again, reaching an all-time high of 67,617 USD in November 2021. This price increase led to a huge hype, but Bitcoin was unable to maintain the upward price trajectory. By November 2022, the price had fallen to under 17,000 USD, leading to strong media criticism and a loss of confidence in the still-young crypto world.

 

Despite Bitcoin’s recent positive momentum, reaching the 50,000 USD mark in February 2024, the memory of its sharp decline still looms large for many novice investors. The situation was further complicated by the market’s reaction to the launch of Bitcoin ETFs in the USA. Many investors had hoped for a strong price increase once the USA approved the Bitcoin ETFs. Yet, the market responded with restraint following the announcement in January 2024. After some time, however, Bitcoin’s value began to climb, eventually reaching a new all-time high of over 73,000 USD on March 13th.

 

The market events of the last two years will influence the upcoming Bitcoin Halving. Some investors have become cautious after the rally, while others, buoyed by the recent months, are optimistic and have high hopes for the 2024 Bitcoin Halving. 

Regulated Providers in the Crypto Market

Many established crypto exchanges and brokers have served as reliable trading platforms for investors over the years. For the past 5 years, you’ve been able to buy, sell, and securely store your cryptocurrencies easily and reliably with BISON. Many players in the international market do not need a license to operate. However, Germany stands out as a regulated hub for the trading and custody of cryptocurrencies. Since 2023, Boerse Stuttgart Digital Custody GmbH, a subsidiary of the Boerse Stuttgart Group, has been licensed by BaFin to provide custody services for cryptocurrencies, managing the safe storage of assets acquired through BISON for our customers.

 

Since the last Bitcoin Halving, the trading of Bitcoin and other cryptocurrencies has become more regulated. This will also impact the 2024 Bitcoin Halving.

Global Increase in Inflation and Interest Rates

In 2020, investors found themselves in a futile search for interest rates amidst inflation rates of 0.7% in the EU and 1.23% in the USA. Fast forward to 2024, and investors are experiencing higher interest rates, albeit alongside a higher inflation rate of 6.4%. On March 7th, the European Central Bank decided to maintain the prime rate at its current level. Since September 20, 2023, the ECB has set the interest rate for the Eurozone at 4.5%, a figure that matches the highs of the early 2000s.

 

Consequently, investors find themselves navigating a completely different market landscape. Lower-risk investments, such as money market accounts, are once again yielding interest profits. However, inflation is so high that the higher interest does not compensate for inflation. Recent months have demonstrated the significant impact that policy decisions by the FED (USA) and the ECB (EU) have on both the stock and cryptocurrency market.

Market Dynamics: The Impact of Bitcoin Halving

Historical Impact of Halvings on Bitcoin Price

History shows that Halvings have always had a strong correlation with Bitcoin’s price and a significant influence on market dynamics. The first Halving occurred on November 28, 2012, when the reward was reduced from 50 to 25 BTC. At that time, the Bitcoin price was about 12 USD and rose to 127 USD within 150 days. A similar trend occurred with the Halving in July 2016, when the reward was halved from 25 to 12.5 BTC, and the price climbed from 650 USD to nearly 20,000 USD (December 2017). The last Halving in May 2020 was also followed by a significant price increase to over 67,000 USD (November 2021)

This chart shows how Bitcoin has developed over the years. All Bitcoin halvings are also shown

While predictions about the future price of Bitcoin are just speculation, many investors and market observers expect the 2024 Halving to influence the market. Based on historical dynamics, the Halving is expected to lead to a scarcity of supply amidst steady or rising demand, thus elevating Bitcoin’s price. The decrease in miner rewards will slow the rate at which new Bitcoins are produced. This, in the presence of steady or rising demand, could result in a scarcity of supply, pushing the price up.

 

However, there are also concerns about the impact on miners. The reduced rewards could prompt some miners to leave the network, potentially decreasing the activity and security of the network, as measured by the hash rate (computational power).

 

These points clearly indicate that the 2024 Halving differs from previous Halvings. As such, it’s yet to be determined if the 2024 Halving will mirror the positive impact on Bitcoin’s price that has been seen in past events. Additionally, there’s speculation on whether the effects of the Halving are already reflected in Bitcoin’s current price, given that numerous market participants have been anticipating the event for months, hoping for a significant price increase.

Bitcoin Halving 2024: Implications for Investors

The Bitcoin Halving stands out as a pivotal event for crypto investors, many of whom anticipate a price increase akin to those following previous Halvings. The Halving cuts the production of new Bitcoins by half, creating a potential shortage in supply. If demand remains stable or even increases, it’s expected to drive a long-term rise in Bitcoin’s price. Investors should keep in mind that the halving has significant impacts on miners. The lower the reward, the less interest there may be in acting as a Bitcoin miner. The third aspect is market psychology. Are many investors contemplating selling their Bitcoin at the time of the Halving, or are many looking to start buying then? If many investors have already bought Bitcoins, the demand and subsequently the price may drop after the Halving. Alternatively, if a significant influx of new investors decide to buy Bitcoin in the weeks leading up to the Halving, could we see the price climb? These considerations play a crucial role in shaping investors’ decisions on whether the 2024 Halving presents a worthwhile investment opportunity in Bitcoin. 

Summary and Future Outlook After the Halving

The Halving is a core mechanism of the Bitcoin Blockchain. It aims to help Bitcoin approach a long-term inflation rate of 0%, thereby making it an ideal store of value. Beyond being a store of value and a digital currency, Bitcoin also serves as a speculative asset, similar to stocks, bonds, and real estate, making the Bitcoin Halving an exciting event for investors. Due to various factors, the 2024 Bitcoin Halving significantly differs from the 2020 Halving, which is why we’re all eager to see how the market will develop over these next few months. 

Bitcoin Halving Countdown

The countdown to 2024’s most significant Bitcoin event has begun. Estimates suggest that this countdown will conclude sometime between April 13 and April 24. If the block time remains precisely at 10 minutes, the upcoming Bitcoin Halving is anticipated to take place on April 21.

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Expected Halving Date: April 21, 2024, 01:06 a.m.

Bitcoin Halving Table: Date, Block Height, and Rewards

Halving Datum Blockhöhe Block-Reward
Bitcoin-Einführung 3. Januar 2009 0 50 BTC
1. Bitcoin Halving 28. November 2012 210.000 25 BTC
2. Bitcoin Halving 9. Juli 2016 420.000 12.5 BTC
3. Bitcoin Halving 11. Mai 2020 630.000 6.25 BTC
4. Bitcoin Halving 20. April 2024 840.000 3.125 BTC
5. Bitcoin Halving 2028 1.050.000 1.5625 BTC