The cryptocurrency sphere is abuzz with one phrasing echoing around the world: Bitcoin halving! There’s a good reason why so many investors are talking about it, and if you aren’t familiar with what it means, now is the time to learn – particularly due to the potentially huge impact it will have on the value of Bitcoin moving forward.
To begin with, Bitcoin was designed from the get-go to halve. While it may sound like something a glacier does, in this context it’s a much hotter situation. “Halving” means that it will take Bitcoin miners twice as much effort to produce one Bitcoin, meaning the supply of Bitcoin will decrease (and its value should go up, per Economics 101). Without getting too technical, halving slows supply by decreasing the total number of Bitcoins that are awarded with each mined “block”. The number of Bitcoins is cut in half, so while miners have been churning out a steady supply of Bitcoin month-to-month, there will be a noticeable drop in new Bitcoins being created after the halving (until miners scale up their operations to compensate).
The reason Bitcoins were designed to periodically halve – and it’s happened three times since 2009 – is to slow the supply of Bitcoins onto the market and create healthy demand. With a finite supply of 21 million Bitcoins in the world to be mined, making sure they were released gradually was a way to stabilize the coin over time. Think of it like the opposite of the U.S. dollar. With the dollar, we just keep printing more and more of them, so it’s no wonder their value decreases so much! Bitcoin’s halving is a protection against inflation by slowing down supply over time.
There are currently 19.6 million Bitcoin in circulation, meaning we’re nearing the point of full circulation. That doesn’t mean the Bitcoin halvings will be stopping, though. In fact, after the upcoming halving this April, there will be 28 halvings left to go, with the last taking place in 2140.
When is this next halving? It’s expected to come sometime in mid to late April. An exact date can’t be known this far out because it occurs at a specific number of mined blocks is hit (in this case, 740,000). So the timing can be estimated based on the current rate of mining, and that estimate will get more accurate the closer we get to the halving.
Impact of Halvings
To recap, Bitcoins are designed to halve to slow the supply, which increases their value. It sounds bad for miners, and it’s true that their profit margins will be shrinking. But what does it mean for everyday crypto investors? To find out, let’s look at what’s happened after previous halvings.
The first halving took place in 2012. When it did, the value of Bitcoin was $12.20. Three months after that initial halving, the value had gone up by 153% to $30.90. Cryptocurrency was new on the scene still, and interest was high, leading to triple digit growth.
The second halving was in July 2016 when the U.S. economy was slowing. At the time, Bitcoin was valued at $633.40. By the end of the year, Bitcoin had climbed to $963.74. Not a bad return at all.
That brings us up to the third halving, which took place in May of 2020 (historically not a great year for the economy). The value at the time of halving was $8,730; within three months it had shot up by 35.8% to $11,680. By the end of the year, it was up to $23,477, fueled by investors seeking to protect their assets in the face of economic uncertainty.
Clearly, halvings have a significant impact on the value of Bitcoin, and there’s no reason to expect anything less from the upcoming halving. In fact, some are expecting even more, owing to the launch of Bitcoin spot ETFs earlier this year. With the value of Bitcoin already over $50,000 and the coin being dubbed the “world’s most popular investment asset”, it’s easy to see why experts are calling for $200,000 by the end of 2025.
