Key Points
- Bitcoin’s next halving event is expected to happen in a month, with the miners’ reward dropping from 6.25 BTC to 3.125 BTC per block.
- Historically, Bitcoin halving events have been associated with significant price fluctuations.
Bitcoin’s next halving event, which is programmed to occur every 210,000 blocks or approximately every four years, is anticipated to take place in a month. This event will see the reward for miners on the Bitcoin network drop from 6.25 BTC to 3.125 BTC for each block they mine.
Bitcoin Halving Events
Bitcoin halving events are automated processes that reduce the block reward by 50%. Miners continue to earn additional transaction fees for each block mined. There have been three such events in Bitcoin’s history, with the block reward inflation decreasing from 50 BTC to 25 BTC in 2012, then to 12.5 BTC in 2016, and finally to 6.25 BTC in 2020.
These halving events will continue until the last of the 21 million bitcoins is expected to be mined around 2140. After this, miners will only earn from transaction fees.
Impact on the Market
Historically, these events have been linked with significant price fluctuations in Bitcoin. While there is no direct cause-and-effect relationship, these events have often preceded substantial bull runs in the Bitcoin market.
The decrease in the supply issuance rate highlights Bitcoin’s scarcity, thus increasing demand and driving its price higher. A recent report suggested that the upcoming halving is most likely not factored into the current market.
The report also stated that the impact of the halving will not be immediately visible but will be reflected gradually over time as the supply deficit induced by the halving accumulates.
Bitcoin’s price experienced a 10% slide from a peak of $68,136 to a low of $61,506 amid record outflows from the U.S. spot bitcoin ETFs. However, it recovered to $63,994, showing an over 50% increase year-to-date.
