Bitcoin, the most used cryptocurrency, has surpassed the ‘halving’, an event that occurs every four years and involves reducing the issuance of new coins, with doubts about the price evolution and the future of ‘mining’, a key activity for the operation of the system.
In the first hours after the ‘halving’ the price of bitcoin remains stable, around $64,000, far from the historical maximum reached on March 14, when it almost touched $73,798.
Experts expect the ‘halving’, the fourth in bitcoin’s history, to boost its price, although they do not rule out a period of short-term volatility. In any case, they warn that the effects will be seen in a few months.
“Historically, bitcoin has experienced significant price increases in the six months following each ‘halving’“, points out Javier García de la Torre, director of Binance platform for Spain and Portugal, in a report analyzing this event.
According to García de la Torre, “although past performance does not indicate future results, these trends provide insights into the potential impact” of ‘halving’.
However, he specifies that the evolution of bitcoin will also depend on the “general market sentiment” and other factors.
In this regard, the Binance executive highlights the decision of the SEC, the U.S. regulator, to authorize the creation of exchange-traded funds (ETFs) linked to the spot price of bitcoin, a measure that “has increased demand” and “has helped to expand the reach” of this cryptocurrency.
The SEC’s decision has facilitated the entry of institutional investors into the market, leading bitcoin to reach all-time highs. The ‘halving’ has meant cutting in half the reward that ‘miners’ receive for validating transactions. Unlike central bank-issued currencies, bitcoin creation is done in a decentralized way through a process known as ‘mining’.
‘Miners’ receive a certain amount of bitcoins for every block of transactions they validate. After this ‘halving’, the miners’ reward has gone from 6.25 bitcoins for each mined block to 3.125 bitcoins. This way, the creation of new coins is reduced from 900 bitcoins a day to 450. ‘Halving’ occurs every time 210,000 blocks of transactions are mined, which usually happens every four years.
In bitcoin’s history, four ‘halving’ have already been recorded, in 2012, 2016, 2020, and now in 2024. Bitcoins will continue to be issued until there are 21 million coins in circulation. Currently, 19.6 million have already been issued. Another aspect to consider is the impact of ‘halving’ on ‘mining’ activity, key to validating transactions.
‘Miners’ will be, in principle, the most affected, because their bitcoin reward has been reduced. However, this cut could be offset by the likely appreciation of the cryptocurrency.
