With bitcoin’s price racing towards $100,000, it is worth revisiting one of the key factors behind the cryptocurrency’s rise over the long-term: the gradual fall in its supply and its next halving.
On 18 April last year, bitcoin experienced its 4th “halving” – the pre-programmed event when the amount of the cryptocurrency generated by those who “mine” it digitally is halved, in order to gradually limit the supply in circulation. Miners receive payments of crypto in exchange for contributing their computing capacity to complete blockchain transactions.
Many factors, such as a supportive macroeconomic environment, have contributed to the rapid rise in the price of bitcoin since the start of this year. Yet the halving is likely to have been a key reason for it reaching a new all time-high of more than $100,000 in December 2024, as the reward to miners fell to 3.125 bitcoins from 6.25 bitcoins.
Bitcoin shot up 65% between the start of 2024 and 13 March, restoring its price to a level last seen in 2021, when it benefitted from the wave of stimulus injected into the global economy to counter the impact of the coronavirus pandemic.
Bitcoin’s price actually fell around 25% from between that date and a low of around $54,000 on 7 September last year, however, likely as the impact of the halving had already been priced in by speculators prior to the event itself.
While there are good reasons to think that the latest halving had a significant impact on price, at least in the run-up to it taking place, researchers are divided on what these events mean in definite terms. There have been long-term price rises in bitcoin following the previous halvings in 2020, 2016 and 2012, but it is difficult to untangle these from other factors affecting market sentiment.
In common with the 2024 event, in each case the market appears to have priced in much of the impact. As the sophistication of crypto markets continues to grow it becomes more likely that the biggest traders will prepare well in advance for the impact of future halvings.
More recently, bitcoin has surged around 90% since its September low on the back of the election of Donald Trump as US president, as well as expectations of a Republican victory. The surge is largely because Trump’s incoming administration is anticipated to take a much more favourable view on the crypto industry and its regulatory status than that of incumbent president Joe Biden.
The recent halving has provided support to this boom. As financial analyst Jackson Wong PhD noted in the Good Money Guide recently “it seems a supply squeeze is happening. A low BTC price serves no one well.”
Bitcoin’s staggering long-term recovery appears to have begun in November 2022, after it hit a low of around $16,500 on the back of a pessimistic global economic impact as the US Federal Reserve and other central banks hiked interest rates to dampen spiking inflation.
Regulatory uncertainty has also dragged down crypto prices at times, with the US Securities and Exchange Commission (SEC) under former chair Gary Gensler undertaking a crackdown on the often freewheeling industry. Trading and mining of crypto has been officially banned in China since 2021.
- How to buy Bitcoin safely in the UK – read our expert guide.
When is the next Bitcoin halving
With all this in mind, investors and traders interested in crypto might want to think about when bitcoin’s next halving is expected to take place.
According to most estimates, the next Bitoin halving will be in March or April 2028. A more specific date cannot be given right now, as each halving happens automatically when a certain number of blocks have been mined, rather than according to a pre-set timeframe.
Each halving is triggered after 210,000 blocks have been mined, with the anticipated 2028 halving set to occur when block 1,050,000 is mined. The time it takes to mine a block is partly determined by computing power, as well as competition between miners to solve the complex mathematical puzzles that lead to blocks being mined and more bitcoins being generated.
As with the last halving, it seems reasonable to expect bitcoin traders will move to price in the market impact of the event well before it happens.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
