Author: Anfelia_Investmentv Inversor Pro✔️
The halving procedure is inherent to the functioning of Bitcoin, since it not only regulates its supply, but by extension conditions the supply. Every time it happens, the markets experience a significant variation. BTC, of course, because it is the affected party, and the rest of the cryptocurrencies due to the market effect.
For this reason, it is important to know what the halving consists of, what its characteristics are, when it is expected to occur again and, of course, the price effects of Bitcoin in the past. This is the way to estimate the behavior that BTC experiences from the next halving, which will occur in 2024.
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What is Bitcoin halving?
First of all, it is worth remembering that Bitcoin was born with the objective of being the anti-fiat currency, that is, to break with the status quo of what have been legal tender currencies, from the US dollar to the Swiss franc. The control of the issuance of currency by central banks, and in turn the evident weight of governments over these organizations, means that any currency worth its salt is doomed to inflation.
That does not happen with Bitcoin. Firstly, there is a limited supply of 21 million BTC, which prevents inflation from occurring as there is no more money supply. But what happens if those 21 million coins are issued too quickly? Well, that's precisely what Halving is for.
Through this process, the network itself regulates the issuance of new currencies, each time reducing the value that is in force at that time by half. In this way, although there are currently more than 19,438,900 BTC in circulation, that is, 92% of the total issuance, it is guaranteed that the last Bitcoin put into circulation will reach the year 2140.
The philosophy behind the halving, and by extension, behind the cryptocurrency itself, is to make Bitcoin a scarce and therefore valuable asset. In the same way that scarcity favors the revaluation of gold or the lack of land in a large city causes houses to maintain their price and increase it over time, the same is expected to happen with cryptocurrency.
«Bitcoin's scarcity of production is what defines its finiteness, and when the reward goes down, supply is limited […] Increasing demand at a time when supply is limited has a positive impact on the price, which which can make Bitcoin attractive to investors.
Chris Kline, COO en Bitcoin IRA
How the Bitcoin halving works
Bitcoin works through a consensus algorithm known as Proof of Work, a mechanism by which the so-called miners validate the operations and install them on the network. Approximately every 10 minutes Bitcoin miners produce a block for the blockchain and in return are rewarded with a certain number of BTC. In this way, they are not only responsible for the correct functioning of the network, but they are also responsible for supplying the monetary supply.
The halving itself starts automatically once 210,000 blocks have been generated on the network. This, at the established production speed, means that a phenomenon of this type occurs every four years. It is estimated that in total there will be 32 halving operations before the 21 millionth Bitcoin is issued.
Historical halvings in Bitcoin
Not counting the halving that will occur in 2024, in total there have been three processes of this type: in 2012, 2016 and 2020. Approximately 50% of the total BTC supply was mined in a matter of a few years and at that time the The reward that the miners obtained was 50 Bitcoins. This period is commonly known as prehalving.
The following table collects the data for a better interpretation:
The effect of the halving on the BTC price
The halvings in BTC have had a truly interesting behavior, since after a year since the event occurred, significant price increases are seen. It is also true that right after the first halving there is a price drop.
“Historically, there is a lot of volatility in the price of Bitcoin before and after a halving event. However, the price of Bitcoin usually rises significantly a few months later.
Rob Chang, CEO de Gryphon Digital Mining
Far from being something bad, this specific drop can serve to adopt the necessary positions for the future rally that will occur in the following months.
The halving as a starting point for stock market rallies
Whether it's a coincidence or not, on the three occasions that there has been a halving process, a major stock market rally has followed. This is what has happened in previous halvings and that can serve as guidance for the future halving 2024.
Impact of the halving in 2012
The first Bitcoin halving occurred on November 28, 2012. On that occasion the price of BTC closed at $12.40. A year later, on November 28, 2013, the currency was trading at $1,101.40. The revaluation in one year was 8,782%:
Impact of the halving in 2016
The 2016 halving occurred exactly on July 9 of that year, at that time the session closed with BTC that was trading at $651.8 and, just one year later, on July 9, 2017, the price of BTC fell. settled comfortably at $2,511.40. This means that the price of Bitcoin rose by 285.30%:
Impact of the halving in 2020
The third and final halving until the one scheduled in 2024 and beyond occurred on May 11, 2020, and at that time it closed at a price of $8,579.80. Just one year later, on May 11, 2021, it would reach $56,695. Therefore, the revaluation that we will find will be 560%:
Does the halving have an impact on other cryptocurrencies?
Whether or not you are an investor in Bitcoin, you should know that the halving will have an impact on your cryptocurrency portfolio. After the halving occurred, strangling the supply and thereby increasing the price of BTC, the market is infected and responds mostly in a marked direction.
“Bitcoin, ahead of the 2024 halving, may also pull up other popular currencies. Thus, if we highlight other currencies that have the potential to grow in the near future in addition to Bitcoin, they are mainly Ethereum, which momentarily crossed the $2,000 mark, and Litecoin, which grew above $90 and is aiming for the level of 100 dollars." explains Dmitry Noskov, StormGain analyst
The reasons can be reduced mainly to two: the drag effect and the correlation between assets. Let's see each section in detail.
The drag effect
Although it is the halving of Bitcoin, the truth is that its impact is reflected in the rest of the important tokens. Whether to a greater or lesser extent, the market effect ends up conditioning all prices, and this is partly due to the fact that Bitcoin continues to represent 48% of the total capitalization of the cryptocurrency market:
Here it is important to take into account an issue as important as the correlation between cryptoassets.
The correlation
The correlation indicates the relationship that one cryptocurrency presents against another, as it allows us to see the divergences when the rises and falls occur at the same time. In other words, it indicates the possibility that one currency behaves the same as another when faced with the same stimulus, so that if one rises, the other will also do so.
Correlation is a numerical indicator that is measured in three ways:
If the correlation > 0, then it is positive
If correlation = 0, then it is neutral
If correlation < 0 then it is negative
Then there is the question of strength in said correlation. In cases of positive correlation, 1 is considered equivalent to 100% replication, meaning that for every point that Bitcoin rises, another cryptocurrency does the same. Similarly, for the negative correlation, 100% would be equivalent to -1, which would be an inverse correlation.
This is a correlation matrix between cryptocurrencies:
All cryptocurrencies compared to Bitcoin have a positive correlation with BTC, and they rise when it rises and fall when it falls, however, with different strengths. It doesn't matter if it's Ethereum, Dogecoin, Polkadot, Ripple, Cardano, ChainLink, Shina Inu or Binance Coin.
For example, Ethereum is the most correlated and captures 85% of the strength in both ups and downs. On the contrary, Ripple would only capture 34% of the movement in both directions, and would be the least correlated.
Combined strategy with Ethereum
If ETH is the token most closely correlated with BTC, would it be possible to develop a combined strategy of both cryptos for the Bitcoin halving in 2024? The answer is yes.
Although there are no comparable records with the first halving, since ETH was launched after 2012, it is possible to draw similarities with the second and third halving.
The following chart shows the behavior of Ethereum at the time of the second Bitcoin halving, which was on July 9, 2016. At that time ETH closed at $10.90. Just one year later, on July 9, 2017, the token closed at $234.97, representing a growth of 2,055%:
Exactly the same thing happened in the third Bitcoin halving. Ethereum closed on May 11, 2020 at a price of $185.96, and the following year, on May 11, 2021, its closing price was $4,177.53. That is, it rose 2,146%:
BTC price forecast after halving
Although there are several months left until the date of the event, analysts consider it possible to make an estimate about what the revaluation of Bitcoin could be from then on.
In this analysis the reference will be the Fibonacci Extension, through which certain resistance zones can be marked that are considered key for gradual growth.
The graph shows that today BTC remains in conflict with the $30,000 area, where a strong blockage has been established. However, it continues to respect the bullish tangential support and, in addition, the price breaks above the moving averages at 50,100 and 200 sessions. That is, there is a comfortable position to continue climbing to the level of $41,000 before reaching the 2024 halving.
Starting from the halving, what is expected is that a rally will begin in the following months that, with relative ease, will be able to beat the all-time highs set by Bitcoin at $69,045. In fact, according to Fibonacci, the next strong resistance level is around $80,000.
BTC valuation according to algorithms
Apart from the forecast that we have been able to provide, the information can be accompanied with data that other sources also provide us, so that the analysis of the halving effect is as complete as possible.
Different algorithmic price prediction tools establish an even more promising outlook for 2025. For example, BitcoinWisdom predicts for that year a minimum value of $87,646, a base scenario around $93,489 and an optimistic scenario with BTC trading at $102,253.
The one who most trusts in the good performance of Bitcoin is undoubtedly Bitnation. In their case, they consider that in the worst scenario BTC will be at $93,450 by 2025. The moderate scenario would be at a price around $102,211 and the most optimistic forecast would raise the bar to $110,972. It is certainly an ambitious forecast, although with cryptocurrencies you never know the limits of where they can go.
Closer to the analysis carried out is the forecast provided by Changelly, who establishes a low scenario with BTC trading at $70,737, a base scenario at $73,257 and in the best case a Bitcoin that would be close to $83,811. It quite coincides with the data provided by the PricePrediction algorithm, which gives $70,751 in the conservative forecast, $73,272 in the moderate forecast and $83,828 in the most optimistic forecast.
Whatever the final result, the truth is that we are unanimously in a situation of high growth.
What do experts think about the Bitcoin halving?
It is always interesting to know the opinions of those prominent figures in the industry, since it is assumed that they have intense knowledge on the subject and therefore can serve as a guide in making certain decisions or others.
In the opinion of Patricia Trompeter, CEO of Sphere 3D, it is most likely that a rally situation will be revived after the halving, although it is true that it does not rule out that the previous times the rebound was more a question of the market than a situation caused by partitioning the blocks:
«If economic theory holds true, which historically has happened for Bitcoin, Bitcoin prices should increase dramatically in response to the supply shock […] Although it is still debated whether the historical price movement around each reduction to the half was a direct product of it.
Patricia Trompeter
On the other hand, David Weisberger, CEO of CoinRoutes, considers that the halving of Bitcoin is as important as that the network continues to remain solid after the process, since that is only where the value of the cryptocurrency is really generated:
“However, the key point for investors to keep in mind is not the specific dates of the halving events, but to focus on the growth of the network in general […] As the network continues to grow, the probability will increase for Bitcoin to fulfill its potential as a global store of value.
David Weisberger
In addition to personalities from the business field, we also have testimonies from famous traders on social networks who wanted to give their opinion on the matter. In your case it seems that the verdict is the same: bet on accumulating before the halving.
Let's look at the case of analyst Lark Davis, very famous among other things for his analysis videos on YouTube:
«There are only about 10 months left until Bitcoin halves. The market will probably be in an accumulation zone until then. After the halving, large and dramatic price increases have historically been seen. 18-24 months until next bullish peak.
Lark Davis
Michaël van de Poppe, an experienced and followed trader in RRSS, who is also committed to supporting the role of altcoins, speaks in the same sense:
«8-12 months before the#Bitcoinhalving is the best time to accumulate#Altcoinsand the period of least interest in the markets. That is the time when you need to be active and interested. That's now."
Michael van de Poppe
Conclusion: How will the next halving affect the price of BTC?
We have reviewed the halving in depth, explaining not only what it consists of but, above all, what has happened in recent years and what could foreseeably happen once the 2024 halving arrives.
The halving is an event that not only affects the investor interested in buying Bitcoin, but also has global extension and determines the movement that the market will make as a whole. That is why forecasts in these situations help us draw up a strategy with our entire portfolio.
Although it is not possible to know with exact precision the day and time in which this event will occur, experts estimate that with the current mining rate we should see the halving on April 26, 2024. It will be a matter of preparing for what what can happen then.
