Bitcoin halving. This is one of the biggest crypto events every four years, if not the biggest one. As we can see from previous halving events, Bitcoin always managed to go up after the halvings took place. It happened in 2012, it happened again in 2016, and so far it’s fulfilling the prophecy again in 2020. While many people are enjoying the current BTC pump, some others are starting to wonder what’s going to happen in 2024.
Before we get there, first we need to know the basics. Basically, Bitcoin has a mechanism to halve its mining rewards every 210,000 blocks, which happens every approximately four years. The rewards will keep getting halved until it becomes 0 (approx. by 2140). The current block reward is 6.25 bitcoins per block and by 2024 we will get to 3.25 bitcoins per block.
In the beginning, the mining reward was 50 bitcoins per block. After the first halving (November 2012), the reward became 25 bitcoins per block. The second halving (July 2016) cut the reward once again to 12.5 bitcoins. The last one (May 2020) halved the reward to 6.25 bitcoins.
The halving mechanism ensures that the new Bitcoin supply will become harder as time goes by. The idea is that when there are more demands and less new supply, BTC price should be able to appreciate. And so far, this theory has been proven true. But, there are some concerns and some theories regarding why this theory would not be correct in 2024. Let’s dive into it.
What Happened With Previous Halvings?
All the previous halving successfully pumped Bitcoin price against fiat currencies. In 2012, 2016, and now in 2020, you can check that BTC has always entered the bull market after halving. It didn’t always go into the bull market instantly, but eventually, it always created a bullish market. For example, after 2016’s halving, BTC price actually was depressed for a few months. But then, it rebounded, and it kept making new highs until the peak of the bull market in December 2017.
In 2020, the story is slightly different, but (so far) it has fulfilled the prophecy once again. BTC price was around $8,500-$8,700 range around halving day, but the price is higher than that level now. Many analysts believe that the bull market will continue until (at least) the end of 2020 or even until 2021. Nobody truly knows, but it’s still very promising so far.
Will It Be The Same In 2024? What Might Happen
Human psychology is quite simple. It follows the same patterns over and over again. In the crypto market (and other markets), price action often repeats past history, especially around similar/same big events. That’s why people thought it would be bullish for the crypto market when the halving happened back in May 2020 (because they checked the price history in 2012 and 2016).
And because there were enough people believing in the same thing, this has become a self-fulfilling prophecy. So, it’s quite possible that we will enter a similar market cycle from the bull market -> bear market -> another bull market after 2024’s halving. This possibility is actually quite big.
However, it’s also important to note that this year we have entered an “unknown territory” due to global COVID-19 pandemic, which has severely impacted global financial stability. Many major countries have officially entered a recession and it might take a long time before we can fully recover from this.
While the crypto market has proven itself to be a recession-proof industry up until today, it’s still naive to assume that it will remain so. We still don’t know what’s going to happen in the rest of 2020 and in 2021. It’s always possible for the crypto market to be “surprised” by whatever happens next. After all, this is the worst pandemic in the past few decades, if not more. We must be careful with further liquidity crises.
Many big banks and major countries are taking big bets that the economy would recover soon with their stimulus packages. Whether these bets would pay off in the end or not, we still don’t know. And how their policies would impact future BTC price, we cannot be 100% certain about it.