The Bitcoin halving: A countdown to April 2024

8th February 2024

Bitcoin mining industry faces consolidation ahead of halving.

As the Bitcoin network anticipates its fourth halving in April 2024, industry experts foresee significant consolidation in the crypto mining sector. Analysts suggest that only Marathon Digital Holdings (MARA) and Iris Energy (IREN) possess the operational efficiency and strategic foresight to navigate the challenges posed by the halving. Read more on the Bitcoin Halving blog.

Historically, Bitcoin's halving events have catalysed bull rallies, with past price surges of 11,000%, 2,850%, and 700% after the 2012, 2016, and 2020 halvings, respectively. The impending halving will reduce miners' revenue by 50%, intensifying the focus on operational efficiency and strategic growth.

Marathon Digital Holdings and Iris Energy stand out with competitive total business costs per Bitcoin mined, making them potential survivors amid rising industry costs. However, the consolidation trend raises concerns about Bitcoin's decentralisation, emphasising the delicate balance between operational sustainability and the ethos of decentralisation.

The consolidation's broader implications extend to Bitcoin's market dynamics, potentially challenging its trust-less protocol. As the mining sector evolves, operational efficiency becomes crucial for sustainability, and Marathon Digital Holdings and Iris Energy have been highlighted as frontrunners positioned to endure the challenges presented by the upcoming halving.

In related news, speculation about Bitcoin's future trajectory is rampant, with experts suggesting a potential surge to US$280k or even US$300k post-halving. Charles Edwards, founder of hedge fund Capriole Investments, predicts a 500% return over the 18 months following the halving, contributing to a conservative estimate of a US$300k Bitcoin price within the next couple of years.

25th January 2024

Decoding the Bitcoin Halving: Strategic insights for traders.

As the anticipated Bitcoin halving event approaches, traders stand at a juncture where they can extract valuable insights from the well-established pattern frequently witnessed in Bitcoin halving cycles. Over the course of Bitcoin's three halving events, marked by significant reductions in block rewards, the cryptocurrency has experienced price fluctuations.

Halving #1: Occurred on November 28, 2012.

marked a reduction in the block reward from 50 BTC to 25 BTC. The price at the time was US$13, and the subsequent peak in the following year reached US$1,152. Prior to this event, Bitcoin was relatively unknown, gaining attention only after its price surged to over US$1,000.

Halving #2: Took place on July 16, 2016.

lowering the block reward to 12.5 BTC. The price at the halving was US$664, and the subsequent peak in the following year reached US$17,760. This period saw Bitcoin and crypto gain widespread attention, accompanied by media criticism and the rise of altcoins and ICOs, leading to both successes and failures in the crypto space.

Halving #3: The most recent happened on May 11, 2020.

Reducing the block reward to 6.25 BT, the price at the time was US$9,734, and the following year saw a peak of US$67,549. This halving further solidified Bitcoin's position in the financial landscape, reflecting significant price appreciation despite initial scepticism and market fluctuations.

Consisting of five stages, this pattern provides a strategic framework, presenting investors with an opportunity to understand the nuanced dynamics of the market. The upcoming halving is estimated to occur between April 18-23, 2024, or when the block height reaches 840,000.

Here is a breakdown of the key stages:

• Significant rally before the Halving: The cycle typically kicks off with a significant uptrend in Bitcoin's price leading up to the halving event. Historical data shows a surge in market activity during this phase.
• Brief correction: Following the pre-halving rally, a brief correction often occurs. This correction can present buying opportunities for savvy traders looking to enter the market at a more favourable price point.
• Period of consolidation: Post-correction, a period of consolidation ensues. This phase involves a stabilisation of prices as the market digests recent movements. Traders should monitor this period for potential breakout or breakdown signals.
• Major bull run: The consolidation phase is typically followed by a major bull run. This stage sees a substantial increase in Bitcoin's price, often surpassing previous highs.
• Steep correction: The bull run is eventually followed by a steep correction. This correction resets market conditions and sets the stage for the next halving cycle.

It's important to note that the all-time high (ATH) tends to occur approximately 18 months post-halving, providing a useful reference point for traders.

Traders should consider the historical context of past halving cycles, including those in 2012, 2016, and 2020. While each cycle demonstrated consistent stages, it's important to recognise that past performance does not guarantee future results.

The recent approval of spot Bitcoin ETFs in the U.S. adds a new dimension to the market dynamics. Traders need to evaluate how these ETFs could influence the established halving cycle pattern, potentially acting as an accelerant to Bitcoin's price movements.

By comprehending the nuances of the halving cycle pattern and staying attuned to market signals, traders can make informed decisions, navigate various stages of the cycle, and optimise their strategies for maximum benefit.

18th January 2024

The Bitcoin halving approaches as market eyes potential bull run.

As the hype and mania around the spot Bitcoin ETF approvals starts to settle, the markets attention is turning to the upcoming Bitcoin halving. Considered by some as a potential catalyst for a bullish market. Historically, the last three bull markets in Bitcoin followed each of the previous halving’s that occurred in 2012, 2016, and 2020.

The halving event, due around April 19, will reduce the block rewards for miners by 50%, from 6.25 BTC to 3.125 BTC. This reduction in daily Bitcoin supply is expected to create a supply crunch, potentially driving the price of Bitcoin higher. However, predicting the exact impact of the halving is challenging, and the immediate effects are likely to be felt by Bitcoin miners.

Miners currently earn about 900 BTC (US$38.9 million) each day through block rewards, and they may face challenges covering their overhead costs, primarily electricity expenses, after the halving. Transaction fees, which have seen an increase in popularity, could help bridge the revenue gap for miners.

The article suggests that Bitcoin's price becomes a crucial factor in the post-halving scenario. If the price drops significantly, miners might need to turn off their mining rigs to avoid operating at a loss, potentially leading to financial stress for the mining market. However, the current price of Bitcoin at U$42k (at the time of writing) provides miners with some buffer, considering an estimate that a drop to US$30k could stress most of the mining market.

The historical performance of Bitcoin around halving events highlights that there is no consistent pattern, although prices generally tend to go up. Bitcoin's performance leading up to the upcoming halving compared to the previous two halving’s, is showing a 50% rally this time, which is better than the lead-up to the 2020 halving and the 2016 halving when, Bitcoin had jumped by less than one-third and fell by 3%, respectively.

There will always be uncertainty surrounding the exact impact of the halving on Bitcoin's price and the mining market. It is important to note that a doubling of Bitcoin's price could alleviate concerns about block rewards for miners.

The Bitcoin halving: A countdown to April 2024.

What is it?

The Bitcoin halving, a programmed and integral event in the cryptocurrency's protocol, occurs approximately every four years, specifically every 210,000 blocks. During this event, the reward that miners receive for validating transactions and securing the network is halved.

How does it work?

This scarcity mechanism is designed to control the issuance of new Bitcoins, contributing to the overall fixed supply limit of 21 million coins. The halving events, marked by a reduction in the rate at which new Bitcoins are created, have historically played a pivotal role in Bitcoin's market dynamics.

Why does it happen?

As the supply decreases and demand remains or increases, it often leads to upward pressure on the price. This phenomenon underscores the deflationary nature of Bitcoin, aligning with its core principles of limited supply and decentralised monetary policy.

When is the next one?

The most recent halving occurred on May 11, 2020, when Bitcoin was trading at US$8,561. It went on to hit its all-time high a year and a half later peaking at US$69k on November 10, 2022, reflecting a 706% increase from the halving date.

The halving is a significant event in shaping the trajectory of Bitcoin's economic model and market behaviour. The next halving is estimated to occur in April 2024.

Historical performance.

Bitcoin's first halving took place in November 2012, when the reward for miners was reduced from 50 to 25 Bitcoins. The impact on the market was profound. In the year following the first halving, Bitcoin's price surged from around US$12 to over US$1,100, marking a staggering increase. This surge was attributed to a combination of reduced supply and increased demand as awareness of Bitcoin grew.

The second halving.

The second halving occurred in July 2016, reducing the block reward to 12.5 bitcoins. Like the first halving, Bitcoin experienced a significant price rally in the following months, reaching an all-time high of nearly US$20,000 in December 2017. The pattern observed in the first two halving’s suggests a correlation between the reduction in block rewards and substantial price appreciation.

May 2020 halving.

As we approach future halving’s, it's essential to consider both historical patterns and the evolving dynamics of the cryptocurrency market. The most recent halving occurred in May 2020, reducing the block reward to 6.25 bitcoins. In the year that followed, Bitcoin witnessed substantial growth, reaching new all-time highs. Analysts attribute this performance to a combination of increased institutional interest, growing adoption, and a heightened awareness of Bitcoin as a store of value.

Predictions for future halving’s.

Looking ahead, predictions for Bitcoin's performance in future halving’s are mixed. Some analysts argue that the historical patterns will continue, with reduced supply leading to increased demand and, consequently, higher prices. Others caution that as Bitcoin matures, its market dynamics may evolve, potentially impacting the relationship between halving’s and price movements.

Factors influencing future performance.

Several factors could influence Bitcoin's performance in the wake of future halving’s. Institutional adoption, regulatory developments, and technological advancements in the blockchain space are among the key considerations. As Bitcoin becomes increasingly integrated into traditional financial systems, its price dynamics may become more influenced by macroeconomic factors and global events.

Additionally, the ongoing development of decentralised finance (DeFi) and other blockchain applications could contribute to the overall demand for Bitcoin. As the cryptocurrency ecosystem expands, Bitcoin's role as a digital gold and a hedge against inflation may become more pronounced.

The historical performance of Bitcoin during past halving events showcases a compelling relationship between reduced block rewards and significant price appreciation. While historical patterns provide valuable insights, the evolving landscape of the cryptocurrency market introduces a level of unpredictability.

As Bitcoin continues to capture the attention of traditional financial institutions and retail investors alike, its role in the broader financial ecosystem will likely undergo further transformation. While predictions for future performance vary, the underlying principles of scarcity and increasing demand remain central to Bitcoin's value proposition. Whether the trend observed in past halving’s will persist or new dynamics will emerge, the cryptocurrency community eagerly anticipates the unfolding chapters in Bitcoin's journey.