Bitcoin’s Next Major Milestone Is A Few Days Away: The 2024 Halving

A once-every-four-years event in the Bitcoin world is rapidly approaching – the highly anticipated “halving.” Scheduled to occur around April 19th, 2024, this mechanism hard-coded into Bitcoin’s DNA is set to cut the rate of new BTC issuance in half. It’s a pivotal moment that could supercharge the crypto’s scintillating 2024 rally and reignite the bull market.

The halving is a deflationary feature designed to control Bitcoin’s supply over time by reducing the block reward paid to miners. From its inception in 2009 until 2012, miners received 50 BTC per validated block. That number was cut in half to 25 BTC at the first halving in 2012, then halved again to 12.5 BTC in 2016, and most recently to 6.25 BTC in 2020.

Now in 2024, the block reward is set to get cut again from 6.25 to around 3.125 BTC. By systematically slowing the issuance rate over time, Bitcoin’s supply is kept scarce in the face of theoretically increasing demand. This perceived scarcity is one of the factors purported to give Bitcoin its monetary value premium as a form of “digital gold.”

The halving events have historically preceded huge price surges in Bitcoin. A year after the May 2020 halving, Bitcoin rallied over 545%. Similar explosive rallies were witnessed after the 2016 and 2012 events as well. The logic is that as new supply slows after the halving, demand has to be higher to sustain price levels.

Some analysts think the halving impact has already been priced into Bitcoin’s blistering 2024 rally amid optimism around newly launched U.S. Bitcoin ETFs and rising institutional adoption. Since January 1st, BTC has surged over 60% to fresh all-time highs near $74,000.

But many Bitcoin veterans believe the halving could simply be the catalyst that reignites the next true crypto bull cycle akin to cycles past. They point to the recent rally as just the warm-up act before the main event. Adding fuel to the fire, the Federal Reserve is expected to cut interest rates later this year, thereby boosting risk assets like Bitcoin.

According to crypto exchange Bitfinex, Bitcoin could rally 160% in the 12-14 months post-halving to over $150,000 per coin if historical trends play out. While past returns are no guarantee of future performance, the scarcity effects of reduced supply could indeed supercharge demand.

Of course, doubters remain plentiful. There’s the argument that three prior data points create a small sample size from which to draw conclusions. The 2020 cycle was potentially inflated by pandemic stay-at-home narratives. And as Bitcoin matures, price movements may become more decoupled from fundamentals like the halving.

For crypto diehards though, the halving represents a once-in-a-cycle opportunity to get positioned ahead of the next major uptrend in Bitcoin prices. After spending 2022 and much of 2023 brutalized by the brutal crypto winter, many view it as the light at the end of the tunnel. Whether it marks just another bullish catalyst or something even bigger remains to be seen. But Bitcoin’s next milestone moment is fast approaching.

Bitcoin Surges Past $50,000 For First Time in Over 2 Years

The price of bitcoin has crossed over the psychologically important $50,000 level this week for the first time since December 2021. The world’s largest cryptocurrency by market capitalization rallied roughly 15% over the past week to hit $50,000 on Monday afternoon, riding a wave of bullish sentiment in crypto markets.

Several factors are contributing to bitcoin’s renewed momentum above $50,000. Firstly, the recent launch of spot bitcoin exchange-traded funds (ETFs) has provided a boost to bitcoin prices. These ETFs, which hold actual bitcoin rather than bitcoin futures, have seen strong inflows from investors. According to data from Bloomberg, spot bitcoin ETFs recorded their second largest day of inflows last Friday, totaling over $540 million.

The two largest bitcoin ETFs – BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Trust – have accumulated substantial assets after only one month of trading. The combination of easy access to bitcoin exposure through these ETFs along with optimism around the scheduled halving event in 2024 seems to be driving enthusiasm and higher prices.

The upcoming bitcoin halving, expected to occur in mid-2024, will see the bitcoin mining reward cut in half from 6.25 bitcoin per block currently to 3.125 bitcoin. This quadrennial event has historically been bullish for bitcoin prices over the long-term. According to a recent report from Grayscale Investments, while the halving poses challenges to miners in the form of reduced block rewards, innovations like Layer 2 scaling solutions could offset this by lowering transaction fees and enhancing throughput.

Beyond market structure changes like the ETFs and the halving, bitcoin also received a small boost from a geopolitical event last week. The re-election of pro-bitcoin President Nayib Bukele in El Salvador for another 5 year term was cheered by cryptocurrency advocates. El Salvador under Bukele was the first country to make bitcoin legal tender in 2021. While Bukele’s visions of a bitcoin-powered economy have stumbled, his re-election signals continued support.

After hitting the historic $50,000 mark, bitcoin pulled back modestly but has remained firmly above $48,000 over the past few days. The key question now is whether bitcoin can rise and continue trading stably above $50,000, which would signal a definitive change in market structure according to analysts.

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Previous rallies above $50,000 over the past two years have been short-lived, with bitcoin failing to establish support at those levels. In March 2022, bitcoin briefly topped $48,000 before slipping back down. And in early January this year, bitcoin hit $50,000 but quickly dropped below $45,000 within days.

This time, bitcoin investors are hopeful that conditions are ripe for bitcoin to finally break out above $50,000. Analysts at Bernstein recently predicted a “fear of missing out” or FOMO rally in bitcoin, as momentum builds following the breach of $50,000. However, bitcoin remains highly volatile, as evidenced by its drop from all-time highs near $69,000 in November 2021 down to below $20,000 by the end of 2022.

Market analysts will be monitoring key support and resistance levels, like the 200-day moving average near $46,500. As long as bitcoin can avoid dropping below these key technical levels, the bullish case remains intact. But buyers will need to maintain consistent support above $50,000 and catalyze follow-on demand in order for this latest move higher to be sustainable. Other factors like rising interest rates and broad macroeconomic uncertainty still pose downside risks.

Nonetheless, the combination of factors lining up in bitcoin’s favor – the surging interest and inflows into spot ETFs, optimistic narrative around the halving, and the breakout above $50,000 – has many crypto investors calling this bitcoin’s next bull run. As bitcoin solidifies its status within mainstream finance and garners attention from major institutional players like BlackRock and Fidelity, the dynamics appear to be changing in favor of greater price stability and less volatility. But bitcoin’s freewheeling ways are difficult to tame. We will soon find out in the coming weeks and months if bitcoin has finally matured enough to leave its past boom and bust cycles behind.