What is Bitcoin Halving?

Bitcoin halving means that the block reward for Bitcoin mining will be reduced by half. Bitcoin is a cryptocurrency that operates through a decentralized blockchain. It is not controlled by a centralized organization. Miners independently participate in mining to assist the operation of Bitcoin. The main incentive for miners to participate is the block reward. The upper limit of Bitcoin issuance is 21 million. This number is fixed and will not change. The way to control the total amount is to halve the block reward every four years.

•Initial block reward: 50 Bitcoins per block

•First halving > reduced to 25 per block

•Second halving > reduced to 12.5 pieces per block

•Third Halving > Reduced to 6.25 pieces per block

•Fourth halving > reduced to 3.125 pieces per block

At present, the total number of Bitcoins issued has reached about 19.48 million, and there are only more than one million Bitcoins that have not yet been mined. It is expected that all of them will be mined in 2140.

What to do if all Bitcoins are mined? Will the miners disband and stop playing if they run out of money?

Why will Bitcoin rise after halving? Decreasing supply + increasing demand + macro environment

Bitcoin adopts the POW (Proof of Work) consensus mechanism. To mine, you must invest computing power and dynamically adjust the mining difficulty. When there are fewer people mining, it becomes easier, and when there are more people mining, it becomes difficult. As more and more people invest in Bitcoin mining, the difficulty of mining continues to rise.

What will happen if the mining difficulty increases? This means that miners have to invest more resources to mine, invest in more advanced mining machines, and invest in higher electricity bills, which all represent an increase in mining costs. However, the Bitcoin halving occurs every four years, and the block rewards for miners are directly cut in half. The cost gradually increases, but the number of Bitcoins that can be mined is halved.

There is a saying that if the price of Bitcoin does not rise, mining will not be cost-effective for miners. The price of Bitcoin must be higher than the cost of mining, so Bitcoin must rise!

This statement is not completely correct. Assuming that the price of Bitcoin is lower than the mining cost, miners can shut down and stop mining. As more and more miners shut down, the mining difficulty will decrease, the mining cost will decrease, and the balance point will be found again.

Mining costs may not be enough to explain the rise of Bitcoin, but it may return to the essence of price fluctuations: supply and demand.

Bitcoin halving means that the supply of Bitcoin is reduced. If the demand in the market increases, the supply and demand imbalance will rise. The first halving is a long time ago. What happened after the second halving was the ICO boom, which drove a large amount of funds into the cryptocurrency field. After the third halving, it was DeFi Summer, and another wave of new blockchain applications drove a large amount of money. Funds enter.

The breakthrough development in the encryption industry has driven a large amount of demand, coupled with the halving of Bitcoin supply, this may be a reasonable reason. Coupled with macro-environmental factors, the last wave of halving prices coincided with the US Federal Reserve's massive release of interest rates and QE after the global pneumonia epidemic. The market was full of liquidity, and at the same time, almost all risk assets around the world were rising.

2024 Will the Bulls Come Back Soon? Smart layout for high returns

Continuing from the previous paragraph, the fourth Bitcoin halving in 2024 means that the supply of Bitcoin will decrease again, but whether it will increase or not depends on two other parts: Has the demand increased? What is the macro environment like?

Condition 1 for the next bull market to start: New funds enter the cryptocurrency field

Demand will only increase. The currency circle says: a new narrative is needed.

Only when new applications or ecosystems break out will more funds flow into the currency circle, and a large amount of demand will be driven. The previous bull markets have gone through these narratives: ICO, public chain battles, DeFi, NFT... The narrative certainly does not appear suddenly. , but after a period of accumulation and brewing, it exploded when the time was right. So what possible potential narratives can we observe now?

If we only focus on#relatednarratives that may drive the entry of external funds, there are two major items that you can pay close attention to now. One is under observation, regarding the passage of Bitcoin ETF, and the second has already occurred and is accumulating, regarding RWA, Real assets are put on the chain and assets are tokenized.

Both of these are new narratives that will drive a lot of money into the cryptocurrency space. As for the previous wave of narratives, they have not disappeared. They just settled down during the bear market and may explode again in the next wave.

Condition 2 for the start of the next bull market: macro environment matching

In addition to the narrative, the macro environment must also be matched. As cryptocurrency gradually enters the perspective of the traditional financial circle, cryptocurrency gradually becomes a target that the mainstream investment circle will also consider. At this stage, it is increasingly difficult for cryptocurrency to emerge from a completely independent market. The correlation with U.S. stocks or other risky assets is getting higher and higher.

The bull market will come back sooner or later, and you can start planning for the next bull market now

The future is too difficult to predict. For us investors in the currency circle, perhaps the key is not to predict the market, but to make plans for possible market trends. If 2024-2025 is really the next wave of bull market, how can we plan now?

Four steps for the next bull market layout of cryptocurrency:

1. Invest money you can afford to lose (definitely don’t pressure your net worth, keep your spare money to participate)

2. Buy coins with explosive potential (the focus of the next paragraph: find the next 100-fold coin)

3. Do a good job in asset security management (in a safe exchange, securely back up the wallet private key mnemonic)

4. Keep paying attention + be patient

5. It has been more than fourteen years since the birth of Bitcoin. The first three Bitcoin halvings were accompanied by multiple increases. Will the fourth Bitcoin halving, which is coming in April next year, increase?

6. The future is impossible to predict, but we can sort out a few key points:

7. If there is a narrative that can bring in a large amount of new funds in the currency circle, coupled with the cooperation of the macro environment, coupled with the reduction in supply and topics caused by the Bitcoin halving, we can still look forward to the next round of bull market.

8. If the bull market comes back, we definitely don’t want to miss it. We can start planning in advance and start preparing now to ambush the next 100-fold coin. Although 100-fold coins are not common in the currency circle, they are indeed not uncommon. They were among the first in the last bull market. There are 61 hundred times coins among the 600 big coins.