The world’s largest cryptocurrency by market capitalization, Bitcoin (BTC-USD), remains in focus among many investors seeking growth. One of the key potential upcoming growth drivers for this key crypto will be the upcoming Bitcoin halving, set for some time in 2024.
With this Bitcoin halving event on the horizon, the window of opportunity to buy “cheap” Bitcoins may be closing. For this reason, many experts have pointed to 2023 as a great period to start loading up on this top crypto.
Let’s dive into what this Bitcoin halving event means and what crypto investors should expect from this token moving forward.
What Is a Bitcoin Halving?
It’s not really possible to predict exactly when a Bitcoin halving event will happen. Essentially, a halving takes place every 210,000 blocks, which has typically taken around four years to materialize in the past. If this trend continues, the previous four-year window (2012 halving, 2016 halving, and 2020 halving) will remain intact. That said, we could see this halving sooner, with some calling for a late-2023 date, potentially.
A Bitcoin halving refers to the halving of mining rewards on the Bitcoin network. With half the amount of Bitcoin minted as a reward for miners to validate transactions and secure the network, Bitcoin’s price would need to rise to justify the energy output required to mine Bitcoin.
Bitcoin mining involves highly-specialized computers which solve complex cryptographical problems on the blockchain. Thus, the energy usage for this so-called proof-of-work mining system is immense. For this activity to be economically viable, the price of Bitcoin in U.S. dollars needs to be above the break-even rate, or else the network could see reduced security and longer lag times in transaction processing. Thus, in previous halving cycles, the price of Bitcoin had moved higher around the event (before, but mostly after, said halving).
Will Bitcoin Rise Again?
The number of Bitcoin halving cycles we have to rely on is limited. There’s only been three thus far in the entire life cycle of Bitcoin. Therefore, it’s a small sample size for investors to base their investing decisions on.
However, using history as a guide, there’s a strong correlation between halving events and a surge in Bitcoin’s price. It’s hard to think why this time may be any different (other than the fact that we’re in a starkly different macro environment).