Bitcoin halving is set for sometimes in April 2024 and the concept of reducing rewards to miners and Bitcoin’s scarcity-based model continues to fascinate many in the financial world and the crypto curious. Presently, 93.6 percent of the total Bitcoin supply have been mined, meaning there is only 1.34 million Bitcoins yet to be mined and introduced into circulation. Other key characteristics of Bitcoin include being a decentralized cryptocurrency and is not controlled by any entity. This means for those using the crypto asset as a medium of exchange, they can acquire Bitcoin and transfer it to another party without worry of their funds represented in Bitcoin being held/censored by any authority anywhere across the world.
Halving happens after every 4 years which marks the mining of the 210,000th block on the Bitcoin blockchain network. During this event, the reward to miners also known as the annual issuance rate of Bitcoin into it’s supply ecosystem reduces by 50% which brings the crypto asset closer to its terminal supply of 21 million.
With the maximum number of 21 million Bitcoin that will ever exist, a huge chunk of the 19,656,761.74 Bitcoins is held by private and public companies, governments and exchange traded products or funds. Further, decentralized finance (DeFi) mediums and smart contracts own a significant volume of the grandpa cryptocurrency. Another over 2 million Bitcoins is held on exchange platforms.
Noteworthy, there are Bitcoins already mined but held as dormant coins, some locked or remain inaccessible. These are known as “Bitcoin Zombies” estimated to around 1.4 to 1.7 million Bitcoins. This clearly shows the ordinary person does not own or has access to Bitcoins despite the reducing supply every year. It is worth noting that you can own or buy any amount of Bitcoin and slowly work towards owning a certain portion of the cryptocurrency over time despite the prevailing market price through a strategy known as Dollar Cost Averaging (DCA).
The coming halving event on April 2024 will slash the Bitcoin issuance rate to 1.5625 Bitcoins per block. Thereafter, it will reduce to 0.78125 Bitcoins by the year 2035 within the month of February. At this point the number of Bitcoin mined will be at 99%. This illustrates the fundamentals of Bitcoin being a scarce asset and one that departs from the inflationary tendencies of your normal fiat currencies.
One thing to note is that while many anticipate and wait for price rally with the upcoming Bitcoin halving event as has been the norm with past halving events, research has shown that impact of this event is not priced in the Bitcoin price not after an year.
A fundamental explanation to this market behavior is led by miners’ activities before, during and after the halving event. Miners over this period tend to increase their amount of Bitcoin on exchange platforms which sends a market indication of dumping of their previously held reserves further affecting the price of Bitcoin by a reduction due to the natural laws of demand and supply. This is normal as the miners are trying to sell their reserves at an anticipated “high” price against the reduced miner rewards which is not “incentivizing enough” due to the halving and it is evidenced by the reduced miner activity over this period including lowering of the network’s hash rate.
This may be the case for some months where, after sometime the miners revert to their normal market activities and it is during this time the ecosystem experiences a movement to a new and higher equilibrium price that reflects the actual Bitcoin supply in the market. Historical data has shown that this is the ideal period when there is an actual bull run leading to the price of Bitcoin shooting to an all-time high price mark dictated by the laws of demand and the new supply dynamics. The last all time high price after halving was slightly above $69K. Begging the question which is the next Bitcoin Bull price target after the halving event happening in a few days?
Do your own research always, seek information from established brands like binusu.com to understand the intricacies of buying your next any amount of Bitcoin, and as a brand in the ecosystem we will guide you on how to buy including safely storing your Bitcoin. Over this season, stay woke and remember Not Your Keys Not Your Coins!
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