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2024 is here and that means we are only a few months away from the next Bitcoin halving event.
Past price data suggests that the halving has a dramatic impact on supply versus demand roughly every four years, causing an imbalance that favours long term price appreciation and fuels each bull run.
With several instances of this phenomenon printed right on the BTCUSD price chart, will the halving once again prove to be profitable? Or will the halving fail for the first time ever? Or perhaps something more unique occurs and BTC ETF hype from institutions causes the halving to be front run? Let’s take a look at the many scenarios and how to seize each opportunity.
What is the Bitcoin halving and why does it matter?
The Bitcoin halving is a fundamental aspect of Bitcoin’s economic design, occurring approximately every four years (or precisely every 210,000 blocks mined). This event marks a reduction in the rate at which new BTC are generated and released into circulation. Specifically, the halving cuts the reward for mining a new Bitcoin block in half.
When Bitcoin was first created by Satoshi Nakamoto, the block reward was set at 50 Bitcoins per block. This reward remains constant for 210,000 blocks, after which it is halved. There have been three halvings:
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2012 Halving: The reward decreased from 50 to 25 Bitcoins.
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2016 Halving: The reward went from 25 to 12.5 Bitcoins.
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2020 Halving: The reward was further reduced to 6.25 Bitcoins.
The next halving, due in April 2024, will reduce the reward to 3.125 Bitcoins per block.
The halving is important for several reasons:
Controlled supply: One of Bitcoin’s fundamental principles is its limited supply – there will only ever be 21 million Bitcoins. Halvings help regulate the pace at which new Bitcoins are created and move towards this finite supply, ensuring that the last Bitcoin won’t be mined until about the year 2140. This controlled supply mechanism mimics the extraction of resources like Gold, becoming more scarce and harder to mine over time.
Economic incentives: Initially, high block rewards incentivised miners to secure the network and process transactions. As the block r
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Author: Crypto Daily
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