Bitcoin Halving In 3 Days: What To Expect From BTC This Week And In 2024

Approximately every four years, the price of Bitcoin (BTC) undergoes a significant event called a halving. This process, which is written into the source code, is meant to bring anti-deflationary characteristics to the token and has helped the price appreciate in the past. However, this time may be different. Take a look.

For starters, the halving is an event in which the amount of new Bitcoins released each block is halved. Currently, the number of new Bitcoins released each block — which occurs approximately every 10 minutes — is 6.25. After the halving, this number will decrease to 3.125 new BTC every block. 

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In terms of impact, this will theoretically lower the selling pressure of Bitcoin. This is because new BTC is given to miners as a reward for verifying transactions. Some miners will sell these tokens as soon as they get them to alleviate any risk associated with holding the tokens for long periods. These miners will end up selling fewer tokens each day if this is the case.

Under this assumption, the price of Bitcoin should go up. If fewer tokens are sold each day, it opens up the market for an imbalance on the demand side, which could send prices higher. However, the market is far more complex than this simple argument and logical conclusion. 

The past halvings have brought about lots of debate and uncertainty. When they first occurred, Bitcoin enthusiasts were divided on whether the market was already pricing in the impacts of the halving. This is because, they argued, the outcome of the event is known and can be forecasted. However, these people vastly underestimated the impact the halving would have on the price of BTC.  

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Before each of the past three halvings, the price of Bitcoin saw a small run-up, which was followed by a huge price increase in the following year to reach new highs. 

The graph above shows the trend with the past halvings. The purple lines show the halvings, which precede newer and higher highs. 

However, this trend is not guaranteed to continue with this halving. With three previous halvings and market cycles under investors' belts, some may be able to better anticipate the trends and get ahead of them. If this is the case, Bitcoin's market cycle could break down, as traders can use past information to create new hypotheses about where the price of BTC will go. 

The main point of evidence for this is that BTC hit new all-time highs (ATHs) before the halving for the first time. If investors are pricing in the halving, this is what would be expected to happen, as the potential impacts of the halving are shown before the event occurs. This could also be a result of other factors, such as the approval of spot exchange-traded funds (ETFs). 

Overall, this stage of the market cycle is unlike anything investors have seen before. With many possible outcomes, only time will tell how the halving will impact the price of BTC going forward. 

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