What is Bitcoin Halving?
Why is there a Bitcoin Halving event?
Why can the Bitcoin Halving event change the game in crypto?
Join Tra Dao Crypto to answer all questions surrounding the Bitcoin Halving event through the article below.
What is Bitcoin Halving?
Bitcoin Halving is an event that halves rewards for Bitcoin miners. Bitcoin mining is the process of using computers to mine Bitcoin by validating transactions, solving related algorithms on the Blockchain. When successful, you will be rewarded with Bitcoin.
After every 210,000 blocks mined (about 4 years), the Bitcoin Halving event will take place.
Accordingly, the difficulty in the mining protocol will double, causing the level of infrastructure investment and mining costs of miners to increase.
“The total circulation of Bitcoin is 21 million BTC. Every 4 years, the block reward will be halved. First four years: 10,500,000 BTC. Next four years: 5,250,000 BTC. Next four years: 2,625,000 BTC. Next four years: 1,312,500 BTC…”
Satoshi Nakamoto, The Cryptography Mailing List, January 8, 2009
The Bitcoin Halving protocol mechanism is so designed to control the issuance of Bitcoin and maintain its scarcity. Ensure BTC supply never exceeds 21 million and is not subject to inflation.
Bitcoin Halving through the years
The first halving event
On November 28, 2012, the first halving event took place, Bitcoin price was approximately 12 USD.
Six months later, around May 28, 2013, the price of BTC increased to approximately $130.
Second halving event
On July 9, 2016, the second halving event took place, Bitcoin price was about 660 USD.
By January 9, 2017, the price of BTC increased to around $900, showing a significant increase in value in six months.
Third halving event
On May 11, 2020, the third halving event took place, Bitcoin price was about 8,600 USD.
Just 6 months after the Bitcoin Halving event around November 11, 2020, the price of Bitcoin increased to 15,700 USD.
The fourth Bitcoin Halving event is about to take place
Bitcoin's next halving event is expected to take place in April 2024. It is difficult to know the exact date because it depends on whether 840,000 blocks have been mined.
Every time 210,000 blocks are mined, the Bitcoin Halving event will take place. The fourth Halving means that 840,000 blocks have been mined.
Currently, the 19 millionth Bitcoin was mined in April 2022. There are only about 2 million Bitcoins left unmined, and it is expected that no more will be created by 2140.
When all 21 million Bitcoins are mined, the miner's reward will be transaction fees. This transaction fee ensures that miners still have an incentive to maintain the Bitcoin network.
Hint: 🔗 How much money does it take to play Bitcoin? How to invest in Bitcoin in Vietnam.
Why is Bitcoin Halving an investment opportunity?
Mining rewards started at 50 BTC when Bitcoin was launched in 2009. Since then, there have been three halvings and the value of BTC has continuously increased over the years.
Based on that growth, most people believe that when the next halving event occurs, Bitcoin's value will reach a new ATH. However, for Bitcoin's price to increase is not only the Bitcoin Halving event but also depends on many other factors.
For example: In 2021 El Salvador accepts Bitcoin as legal currency, launches the first Bitcoin ETF, Bitcoin Blockchain completes Taproot upgrade,... thereby creating momentum for growth.
From January 2024 to March 2024 is the approval period for the Bitcoin ETF Spot. This period is also close to the time of the Bitcoin Halving so the wave of FOMO will be huge.
To date, the number of points of sale accepting payment in BTC has increased by 174%.
Strategy for investing in Altcoins in the next Bitcoin Halving cycle
Choose good Altcoins with low capitalization to invest before the Bitcoin Halving event takes place. The purpose is to catch the flow of money moving from Bitcoin, why is that so?
According to the rules from previous halvings, when Bitcoin Halving occurs, BTC will increase in price, which is also when "sharks" sell to take profits. According to common psychology, they will invest part of the profits earned from BTC into projects with lower capitalization to continue to seek profits.
This is also the time when Altcoins with good foundations will attract cash flow.
The Halving event causes BTC to increase in price first, then causes Altcoin to increase in price in the later stages. The entire market will experience significant growth.
Epilogue
Bitcoin Halving is a huge event and takes years to happen.
While Bitcoin value typically increases after each halving, these are all just predictions based on previous growth data. Bitcoin's value increases depending on many factors such as: macroeconomics, inflation, politics, conflicts as well as other developments.
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