The Bitcoin Halving Cycle refers to the event that occurs approximately every four years, where the reward that miners receive for each block mined on the Bitcoin network is cut in half. This event is designed into the Bitcoin protocol to control inflation and increase the scarcity of the currency over time.
How does the quad cycle work?
1. Reduce rewards:
When Bitcoin was launched in 2009, the reward for each block was 50 bitcoins. After about every 210,000 blocks (roughly 4 years), this reward is halved. For example:
2012: The reward decreased to 25 bitcoins.
2016: Dropped to 12.5 BTC.
2020: Dropped to 6.25 BTC.
Expected in 2024: It will drop to 3.125 Bitcoin.
2. Economic impact:
Reducing the number of new bitcoins being produced reduces supply, which supports scarcity and increases demand. Historically, this has led to a significant spike in the price of bitcoin shortly after a halving occurs.
3. Market link to the quadrennial cycle:
Markets typically follow a recurring pattern that includes a large rally after a halving (bullish market phase) followed by a correction (bear market phase).
This cycle affects investor sentiment and attracts more institutional investors during bull market periods.
4. Impact on mining:
With the rewards decreasing, Bitcoin miners are increasingly relying on the rising price of the coin to maintain their profits, along with transaction fees on the network.
The importance of the quadrennial cycle:
It gradually increases scarcity, enhancing the overall value of Bitcoin as a scarce asset.
It regulates the supply in the market, making Bitcoin more stable in the long run.
This cycle is an important indicator for investors and analysts to anticipate future market trends.
The previous half was in 2024:
The halvi we are affected by was in April or May 2024, which is the fourth, and it has had a major impact on the market as we see it, especially with the increase in institutional adoption and regulation of digital currencies via ETFs.