Bitcoin has experienced its fourth halving in history. This event not only has a profound impact on the Bitcoin mining ecosystem, but also has aroused widespread attention and heated discussions in the cryptocurrency market.
Binance Exchange - the world's largest Bitcoin exchange, register to receive a 20% commission rebate.
Binance referral code XSGEK3VL
Binance registration: https://www.binance.com/zh-CN/join?ref=XSGEK3VL (20% commission rebate) or refer to the Binance registration tutorial. Spot contracts are automatically rebated 20% every hour.
A brief history of Bitcoin halving
The first Bitcoin halving occurred on November 28, 2012, when production dropped from 50 BTC per block to 25 BTC.
Before the halving, the price of Bitcoin experienced a wedge-shaped wash, rising to a high of US$15 and falling to a low of US$8.
After the halving, the price continued its upward trend, accelerating especially in January 2013.
During this period, the establishment of the Bitcoin Foundation and WordPress' support for Bitcoin payments became important positive events. The review shows that the sufficient wash-out and application landing before the halving created good conditions for the market to rise.
The second Bitcoin halving occurred in July 2016, when production dropped from 25 BTC per block to 12.5 BTC.
Before the halving, the market experienced a wedge-shaped washout and prices fluctuated greatly.
After the halving, the market first declined and then rose, experienced a downward breakthrough and a three-month low wash, and finally returned to and broke through the halving day price, starting a new upward trend.
During this period, events such as Japan's recognition of Bitcoin's currency function, the gradual legalization of Bitcoin commerce, the activation of soft forks, and the hacker attack on Bitfinex became important factors affecting the market. The market reaction after the halving showed that speculators were washed out, creating better investment opportunities for long-term investors.
The third Bitcoin halving occurred in May 2020, with production falling to 6.25 BTC per block.
Before the halving, affected by the global epidemic and the circuit breaker of the U.S. stock market, Bitcoin experienced a sharp drop, with a one-day drop of nearly 40% and a one-month retreat of more than 60%.
After the halving, the market experienced a long period of sideways correction and did not really start to rise until late October.
During this period, the United States declared a public health emergency, and Paypal announced support for Bitcoin trading, which became an important positive. The black swan event before the halving caused a deep cleansing of the market, but then the market gradually emerged from the trough and entered a new rising cycle.
The fourth Bitcoin halving occurred on April 20, 2024. This event has had a wide-ranging impact on the Bitcoin ecosystem, miners, and the market.
The impact of Bitcoin halving
1. Economic impact on miners:
Bitcoin halving means that the block reward for miners is reduced by half, from 6.25 bitcoins to 3.125 bitcoins. This directly leads to a 50% reduction in the main source of income for miners, which may cause some miners to choose to exit the mining industry and turn to other fields because the income is not enough to cover the cost.
Miners are an important guarantee for the security of the Bitcoin network, and their withdrawal may affect the stability and security of the Bitcoin network.
2. Impact on Bitcoin Supply:
Halving is the basis for the fixation of Bitcoin's supply, ensuring that the total supply of Bitcoin is close to 21 million. Although halving leads to a reduction in the daily supply of new Bitcoins, this reduction only accounts for 0.6% of daily trading volume, so the impact on the price is relatively small at present.
The halving is a manifestation of Bitcoin's scarcity, helping to maintain its status as a store of value and medium of exchange.
3. Impact on Bitcoin market price:
Historically, Bitcoin halving events are often accompanied by price increases. However, the specific price trend is difficult to predict and is affected by many factors, including market sentiment and macroeconomic environment.
The halving could draw market attention and boost investor interest in the entire cryptocurrency market, thereby affecting the price of Bitcoin and other cryptocurrencies.
4. Impact on investor behavior:
The Bitcoin halving may cause investors to reallocate funds, and some investors may transfer part of their funds from Bitcoin to other cryptocurrencies to diversify their portfolios.
For long-term investors, the halving could be a signal of further confirmation of Bitcoin’s value, and they may continue to hold or increase their investment in Bitcoin.
After the halving, what benefits will the Bitcoin ecosystem have?
1. Supply reduction and price increase: Halving events mean that Bitcoin's block rewards will decrease, which will directly lead to a decrease in the supply of new Bitcoins. According to basic economic principles, if demand remains the same or increases, while supply decreases, then the price of Bitcoin may show an upward trend. Halving events help push up the price of Bitcoin, further increasing its investment attractiveness.
2. Increased scarcity: The design of the Bitcoin halving mechanism makes the total amount of Bitcoin gradually decrease, which increases the scarcity of Bitcoin. Scarcity is usually associated with value growth, so the halving event helps to increase the value and status of Bitcoin.
3. Miners’ computing power competition and ecological development: After the halving, due to the reduction in rewards, miners must increase computing power or adopt more efficient mining technology to keep their income unchanged. This may promote competition among miners and prompt them to invest in newer and more advanced mining machines, thus contributing to the growth of computing power and ecological development of the Bitcoin network.
4. Technological innovation and community development: Halving events often trigger heated debate and attention within the blockchain community, which helps promote technological innovation and community development. Miners need to adapt to the decline in profitability, which may reshape the mining field and stimulate technological innovation and community development within the blockchain ecosystem.
5. Increased market attention and incremental traffic: Bitcoin halving is the focus of intensive media coverage, which helps to increase market attention to Bitcoin and blockchain technology and may attract more investors and developers to enter this field. This increase in attention and incremental traffic will help the further development and growth of the Bitcoin ecosystem.
The fourth Bitcoin halving is an important event that has an impact on many aspects of the Bitcoin ecosystem. For miners, investors, and market participants, understanding and adapting to this change is key to staying competitive. At the same time, the halving also once again highlights the characteristics of Bitcoin as a scarce digital asset, which helps to increase its long-term value. However, it should be noted that the cryptocurrency market is still full of uncertainty, and investors should fully consider various risk factors when making decisions.