The fourth bitcoin halving: the end of one epoch and the beginning of a new

The fourth Bitcoin halving occured on the 19th of April 2024. This event is part of a predictable, deflationary schedule that is hardcoded into Bitcoin’s protocol.

Bitcoin’s halving events are programmed to occur every 210,000 blocks, which roughly translates to every four years. Each halving reduces the block reward given to miners for processing transactions and securing the network by 50%.

The first halving occurred in November 2012, reducing the reward from 50 BTC to 25 BTC. The second took place in July 2016, further cutting the reward to 12.5 BTC. The third halving happened in May 2020, bringing the reward down to 6.25 BTC.
 

The fourth halving decreased the block reward from 6.25 BTC to 3.125 BTC. This event is not only a milestone for miners but also for investors, as historically, halvings have been associated with bullish market behavior.
 

Leading up to the fourth halving, Bitcoin has experienced significant growth, breaking its previous all-time high of $69,044.77 set in 2021, and setting a new high of $73,737.94. This growth trajectory is often attributed to the reduced supply of new Bitcoins entering the market, which, in the face of steady or increasing demand, can lead to price appreciation.

Analysis of past halvings shows that Bitcoin’s price has increased substantially after each event. For instance, within 12 months of the first halving, the price rose from ~$12 to $1,075. Similarly, after the second and third halvings, notable price increases were observed within the following year.
 

It’s important to note that each subsequent halving has brought diminishing returns compared to the last. While the percentage gains have been substantial, they have decreased with each event, reflecting Bitcoin’s growing market maturity and the larger capital base required to move the market.

The halving events also impact Bitcoin’s inflation rate. For example, the inflation rate went from 25.75% to 12% by January 2022, and it’s expected to decrease further post the fourth halving.

The halving is significant because it underscores Bitcoin’s scarcity, a key feature that differentiates it from fiat currencies like the US Dolllar (USD) or the British Pound (GBP).