Published : 4 weeks ago, on 07/11/2024

Halving events have had a significant impact on Bitcoin price over the last decade. The most recent cycle occurred just months ago, and some historical developments could lead experienced and beginner investors to consider pristine methods of preparation. As the next halving event approaches, there are several things to examine and expect before deciding to participate in 2028.

What Is a Halving Cycle?

A halving cycle, also known as Bitcoin halving, is an event dedicated to mining Bitcoin transactions where the reward is cut in half. The event occurs every four years or after 210,000 blocks are mined, reducing the subsequent block reward by 50%. The halving lowers the supply of Bitcoins, so the cryptocurrency market’s conditions may remain unchanged. This event also increases scarcity, consequently raising Bitcoin’s price.

Block rewards stem from the automatic process of validating transactions in the blockchain. Miners participating in Bitcoin halving will open new blocks and compete in a relay to solve cryptographic puzzles. Whichever miner first solves the puzzle earns new Bitcoins in return as a prize. 

The winning miner’s solved block is added to the blockchain before another mining race commences. All miners competing in the new race must confirm the data in the newly added block while attempting to solve the puzzle for their own blocks. Ultimately, all participants hope to receive a Bitcoin reward that continuously decreases for their efforts.

Why Are Halving Cycles Important?

Bitcoin halving events extend a reward to contributors securing the blockchain network, reducing it by 50% and resulting in a new rate for Bitcoins. Miners’ endmost goal is to make Bitcoins even more scarce. Combining this structural scarcity with the increasing demand that follows previous halving cycles will conclusively cultivate a sense of digital rareness that may cause considerable pressure on Bitcoin prices. 

Bitcoin Halving Drawbacks and Benefits

Seasoned miners generally perceive Bitcoin halving events as positive or celebratory occasions. Nonetheless, there are still short-term risks to consider. If the cryptocurrency market’s expectations are not met, this predicament could lead to:

• Increased volatility of Bitcoin
• Precarious market behavior
• Temporary price corrections

On the other hand, there are a few notable reasons why Bitcoin enthusiasts take risks and participate. These benefits often generate:

• Boosted viability of Bitcoin
• Increased community engagement
• The rising rarity of Bitcoin’s supply leading to higher demand

If newcomers desire to participate in the next halving event, anticipated to occur on March 26, 2028, knowing the profits, pitfalls, and predictions may be critical for success.

Past Halving Results and How to Prepare For the Next Event

There have been four halving cycles in total:

• The first commenced on November 28, 2012, decreasing the new number of bitcoins produced per block from 50 BTC to 25 BTC.
• The second cycle took place on July 9, 2026. This event reduced the new bitcoin created per block from 25 BTC to 12.5 BTC.
• The third event occurred on May 11, 2020, and diminished the number of new bitcoins per block from 12.5 BTC to 6.25 BTC.
• The fourth and most recent halving happened on April 19, 2024. The new bitcoin produced per block expectedly decreased from 6.25 BTC to 3.125 BTC.

Historically, Bitcoin’s price increases throughout the year following each halving cycle. However, a price adjustment period typically takes place shortly after. Price movements are additionally affected by several factors, including adoption trends, macroeconomic conditions, and market sentiment. In this most recent cycle, March 2024, Bitcoin reached a new peak a month before its fourth halving in April.

While there’s no proper way to prepare for halving events, it’s essential to stay informed regarding possible market impacts and the time of each cycle. Understanding the fundamental concepts of halving and its contributions to the cryptocurrency market could benefit rookies and experts alike.

Securing Success in the Next Halving Event

Although nothing is guaranteed, as the cryptocurrency market can be highly unpredictable, the successful completion of the next halving event is far more likely with some preparation. These cycles continuously influence Bitcoin’s price, so getting a firm grasp on the basics of halving is an integral part of the process. With the next cycle expected to occur in 2028, crypto connoisseurs and novices should review the risks and rewards as they prepare.