The impact of the “Harving” on bitcoin

The impact of the "Harving" on bitcoin

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min read ▪ with
Nicholas T.

The next Bitcoin halving will happen in less than a year. If history repeats itself, we are at the beginning of a new ATH.

bitcoin in half

One of the most important events for Bitcoin is the “halving” which means that the reward earned by miners will be halved. From 2023, the latter receives 6.25 bitcoins for each block.

This reward is actually distributed in proportion to the power provided by the miners grouped together in pools. These pools build the blocks and are therefore responsible for selecting the transactions.

By the way, there is a risk that these pools, which are not many, will censor certain transactions. If you are interested in this topic, do not miss these two articles:

The next half is expected to happen in April or May 2024. This will depend on how the number of miners will change by then. A steady increase in hashrate will speed things up.

In fact, the halving happens every 210,000 blocks, or about every four years. We are at block 786,820, do the math. The reward for each block will drop to 3.125 BTC in a year.

This system causes the last Bitcoin to be mined around the year 2140 and 92% of BTC is already mined.

How will the halving affect the value of Bitcoin?

The value of everything depends on supply and demand. If the supply falls, all else being equal, bitcoin will appreciate mechanically.

However, it should be noted that the spread’s effect is halved each time. Reducing the block reward (the supply) from 50 BTC to 25 BTC affects the supply more than a decrease from 25 BTC to 12.5 BTC. However, this effect remains the same if demand doubles in the meantime.

That said, the most important factor to consider is the market capitalization of bitcoin. The bigger it is, the harder it is to move the market.

In fact, if bitcoin is worth a billion, it only takes another billion to cause 100% appreciation. If 500 billion bitcoins are worth, it will take about another 500 billion to get another 100% appreciation.

In other words, the more appreciated bitcoin, the more its appreciation will slow down. This is a phenomenon that can be easily seen with the following graph:

“Interesting way to see the purchasing power of BTC compared to halves.
The next half will happen in ~12 months”

With each cycle (by half), the bullish effect is mitigated. This can also be seen very well in terms of annual performance:

2010: +9900%
2011: +1471%
2012: +187%
2013: +5286%
2014: -56%
2015: +34.5%
2016: +123%
2017: +1368%
2018: -73%
2019: +92%
2020: +303%
2021: +60%
2022: -64%
2023: +70% to date

More bitcoins

Expansion is very important, but the arrival of new investors is just as important. Past performance may be repeated if the number of bitcoiners grows as fast as the market capitalization of bitcoin.

Registry is also crucial. Good news, the number of BTC that hasn’t changed hands in more than two years is at an all-time high. 53% of BTC to be exact.

Another thing that has changed recently: the evolution of the number of BTC on the exchanges. This is the first time we have seen such massive withdrawals. The following graph shows that after peaking at 17%, only 12% of BTC would still be on the exchanges.

“This is the first era where the balance of bitcoins on the exchanges is falling…
This time will be different. »

This dynamic is a good sign. It means that fewer and fewer people are wasting their time playing at Binance Casino. The purge of the shitcoinery (Terra Luna, Celius, FTX, etc) has put the church back in the center of the village.

Bitcoin is finally seen as a long-term savings tool. As a NASDAQ-correlated store of value, which is now correlated with gold.

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Nicolas T. avatar
Nicholas T.

Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic and libertarian prisms.


The views and opinions expressed in this article are the sole responsibility of the author, and should not be considered investment advice. Do your own research before making any investment decision.

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