Pre Bitcoin Halving Insights for Traders.

As the date for the upcoming Bitcoin halving on April 19th draws near, excitement is building among cryptocurrency enthusiasts.

Comparing this halving to the one in 2020, a massive difference in Bitcoin’s value. In 2020, it was around $9,000, but now it’s hovering near $70,000. This means that cutting down on the creation of new Bitcoins will likely have a bigger effect this time around. Other experts agree, suggesting that this halving could push Bitcoin to new record highs.

Why Scarcity Matters

The big idea behind all the excitement is simple economics: when something becomes rarer, its value tends to go up. By cutting the rewards for Bitcoin miners in half, the halving reduces the number of new Bitcoins entering the market. Combine this with more big investors getting into Bitcoin.

However, there is a finite number of bitcoins that can be mined — 21 million to be precise. With 19.6 million currently in circulation, only 1.4 million are yet to be mined. When a halving event occurs, the bitcoin protocol cuts in half the number of coins awarded to successful miners. Since 2020, miners have received 6.25 bitcoin for solving a problem. When the next halving occurs, miners will only receive 3.125.

The result is that after each halving, the computing power required to create new bitcoin doubles. In theory, the steep drop in production will cause the asset’s value to appreciate, given that demand for the asset remains constant or grows.

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