Bitcoin halvings are major events that have taken place since the digital asset was launched in 2009. Since then there have been a total of three halvings, each time reducing the block reward by half. The next bitcoin halving will occur in 2024, which means the market is halfway there. As this fourth halving draws closer, let’s take a look at how it’s impacting BTC supply and, in turn, the cryptocurrency’s value.
Fourth halving is imminent
The Bitcoin halving is scheduled to occur every 210,000 blocks, and the estimate for the next halving is set for May 4, 2024, based on the current rate at which BTC is being mined. Currently, just over 19 million BTC has been mined, leaving only 2 million BTC to be mined. With the block reward halving in half, currently at 6.25 BTC per block, this helps predict the supply mechanics of the digital asset.
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With each halving, the daily output and supply decrease. It is expected to drop even further with the next halving, where each block reward would be just 3,125 BTC, and with the average of 144 blocks mined per day, the daily BTC allocated to miners daily will from 900 to 900 falls 450. This contributes to the bitcoin supply decreasing over time, making it one of the core features of the network’s monetary policy.
How it affects Bitcoin
The Bitcoin Halving has various effects on the cryptocurrency. One of the ways in which these effects are more prominent is with mining difficulty. As miners receive less BTC for each block, this makes for stiffer competition, causing mining difficulties to skyrocket. This can be seen in the trend that followed Bitcoin’s last halving, which took place in 2020. The hash rate of Bitcoin is also increasing, as miners need more computing power to mine blocks.
BTC recovers above $41,000 | Source: BTCUSD on TradingView.com
What is remarkable about the current state of the network is the low fees. Although Bitcoin is halfway to another halving, transaction fees have remained near all-time lows. This is said to be the result of more efficient use of block space, as there is no evidence that economic use of the network is declining.
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However, one thing has always remained the same in all bitcoin halvings and that is the impact on price. Now, halfway to the next halvings, the digital asset has seen some of its lowest prices. So there is an expectation that the price will suffer at this point. Nonetheless, a halving that circulates the supply of BTC has always been a catalyst for the next bull rally, and 2024 is expected to be no different.
Featured image of 99Bitcoins chart from TradingView.com
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