Bitcoin Halving Less Than a Month Away - Is It Too Late to Invest?

Bitcoin, the world’s largest cryptocurrency, is minted just like any other crypto token. As it takes about 10 minutes to mint or mine a block of Bitcoin, there are approximately 144 blocks created per day.

Bitcoin miners or validators as they are also called are currently rewarded 6.25 Bitcoins per mined block, so 900 Bitcoins are created on a daily basis. After the halving, they will obtain 3.125 Bitcoins per block, so the daily creation of new Bitcoins will be halved to 450.

Contrary to the narrative on some crypto sites, the absolute number of Bitcoin in circulation is NOT halved nor dropping following the halving.

What happens is that the rewards attributed to the Bitcoin “miners” or “validators,” as they are also called, have been designed to automatically halve every time The Bitcoin blockchain protocol has been designed to automatically halve once 210,000 Bitcoins have been minted. With 900 new Bitcoins created each day, we can forecast the upcoming halving to take place around April 19, 2024.

Strong demand for Bitcoins since the launch of spot ETFs

The crypto universe is quite thrilled about this event, as the launch of nine spot Bitcoin exchange traded funds (ETFs) in the US earlier this year has spurred the demand for Bitcoins way above the 144 Bitcoins added daily to its supply. By March 19, net inflows into the nine new ETFs exceeded $30 billion. This is equivalent to roughly 500,000 Bitcoins, if one carries out the conversion at $63,100, the coin’s price at the time of writing.

“We’re already doing about the double in [Bitcoin] sales or purchases on a daily basis. Basic supply and demand says prices are going to go higher,” the CEO of Sound Planning Group, David Stryzewski, told Fox Business.

Retrace witnessed 2-4 weeks prior to previous halvings, followed by a rally

But the trend is generally the opposite during the weeks coming up to the halving, the crypto profile @rektcapital notes. “A pre-halving retrace tends to occur at 28 to 14 days before the halving event itself…Currently, $BTC is 28 days away from the halving and has pulled back -14% [during the week of March 11].” Thereafter, once the halving has occurred the decline is followed by a “multi-month re-accumulation. This period can last up to 150 days (5 months),” he adds.

After the last halving event in May 2020, the price of Bitcoin surged 559 percent in the following 12 months, Bloomberg reports. After the previous halving in July 2016, it rallied 295 percent in the following 12 months. However, as any savvy investor knows, past performance does not mean that the same development will occur this time around.

“Considering Bitcoin's past performance and increasing adoption, a significant price increase in 2025 is plausible. Factors such as limited supply, growing institutional interest, and wider acceptance in payment systems play a role,”the founder and CEO of Axys Holding, YuyaTakemura, told investing.com.

Different this time around, as all-time high has just been reached

The price of Bitcoin has indeed outperformed other asset classes by a mile over the past couple of months. It fell to a cycle low around $16,600 in the aftermath of FTX’s collapse in November 2022 and then slowly but surely rose throughout 2023. The launch of the spot Bitcoin ETFs in the US buoyed its price as of mid-January to an all-time high of $73,628 reached on March 14. It has since dropped by 14 percent and trades around $63,000.

Bitcoin has still generated returns of almost 50 percent since the beginning of the year, compared to the 8.6 percent return of the S&P 500’s and 9.1 percent return of Nasdaq. Time will tell whether new all-time highs will be reached in 2024 or later.

Interested in learning more on how the Bitcoin halving impacts Bitcoin miners, read more about it here.