Bitcoin halving is one of the most expected events in the world of crypto—a programmed supply shock, often resulting in significant price action. But what actually happens when a halving occurs and why does that create waves across the entire cryptocurrency market?
What is Bitcoin Halving?
Bitcoin halving is a pre-coded event in which bitcoin miners receive half the amount of bitcoin block rewards, hence reducing the rate of supply of new BTC in circulation.
- Occurs every 210,000 blocks (approximately every 4 years)
- The block reward will drop by 50% (ie. From 6.25 BTC cuts down to 3.125 in 2024)
- Total supply is capped at 21 million BTC (Next and last halving expected in 2140)
Bitcoin’s built in scarcity mechanism is why it is called “digital gold”.
How Halving Affects the Crypto Market
1. Supply Shock = Price Pressure
- Less new Bitcoin coming into circulation → Increased Scarcity.
- If demand stays the same (or increases), price goes up.
2. Miner Economics Change
- Miners receive less than half the rewards, forcing the less efficient ones to shut down their operations.
- Some may stop mining, causing reduced selling pressure on the market (most miners sell BTC to help cover their mining costs).
3. Historical Onset of a Bull Run
Historically, in price action following previous halvings (2012, 2016, 2020) there have all been **massive rallies**.
- 2012 Halving: $12 → $1,100 – (9,000%+ increase in 1 year)
- 2016 Halving: $650 → $20,000 – (peak of 3,000%+)
- 2020 Halving: $8,500 → 69,000 – (peak of 700%+)
4. Altcoins Often Follow BTC’s Lead
- Most altcoins (e.g. Ethereum, Solana) typically **mirror BTC’s cycles**.
- When BTC rallies post-halving, generally altcoins will **amplify returns**.
5. Mainstream Attention & Investor Interest
- Halvings attract mainstream coverage, and attract more investors to crypto.
- FOMO can create short-term volatility.
Final Thoughts: Long Term Play
While halvings have traditionally triggered **bull marketing**, they are not a guaranteed wealth creation strategy. Smart investors:
- DCA instead of market timing.
- Realize profits along the way (nobody got broke by taking profits).
- Ignore the noise—certainly stay true to the fundamentals.
