“Science and Technology Innovation Board Daily”, April 15 (Special Correspondent Chen Junqing, Reporter Zhu Ling) Bitcoin prices have recently experienced sharp fluctuations. On April 14, the intraday price once fell below the 60,000 US dollar integer mark. Affected by this, the crypto market is once again bursting over 100 million dollars. As of press time, the price of Bitcoin has rebounded to $66,700.

It is worth noting that it is currently less than a week until Bitcoin is halved for the fourth time. The halving event will cause miner rewards to be reduced, directly affecting the speed of Bitcoin circulation.

Bitcoin halving cycle

Bitcoin halving usually occurs every four years or every 210,000 produced. When Bitcoin is halved, the newly produced bitcoins are reduced by half; in other words, the rewards miners receive for verifying transactions and adding them to the blockchain are reduced by 50%.

Bruce Fenton, CEO of Chainstone Labs, said, “One of Bitcoin's most important characteristics is its limited supply and issuance mechanism, which is why Bitcoin is the most popular cryptocurrency in the world, and one reason why it is viewed as a store of value more similar to gold than fiat money.”

Up to now, Bitcoin has experienced a total of three halving times.

First halving: November 28, 2012, block height 210,000;

Second halving: July 9, 2016, block height 420,000;

Third halving: May 11, 2020, block height 630,000.

The forecast shows that the next Bitcoin halving date is before April 20, 2024.

The halving was accompanied by a rise in prices

In terms of basic logic, a decrease in the rate of production of new bitcoins may lead to scarcity, which may drive up demand, leading to an increase in the price of Bitcoin.

Historically, after the completion of the first three “halving” events, Bitcoin mining momentum will weaken, all accompanied by a sharp rise in the price of Bitcoin. Bitcoin's price increased by 8450% in 2012, 290% in 2016, and 560% in 2019. After the next halving, Bitcoin's production cost is expected to reach around $40,000.

Here's how the BTC price performed after the previous halving:

First halving: BTC price is around $12. A year later, it reached $1,100, and the price has surged nearly 10,000% since the date of the halving.

Second halving: Bitcoin is trading close to $670. In December 2017, Bitcoin approached the $20,000 mark, and since it was halved, the price has risen by nearly 3,000%.

Third halving: BTC price hovers around $9,500. Since then, it took a year and a half for Bitcoin to reach $69,000, an increase of 725%.

The situation of “miners”

During the upcoming halving period, Bitcoin's rewards will drop from 6.25 BTC to 3.125 BTC, which means that the revenue miners receive from block rewards has actually been cut in half.

This change could result in lower hash rates, as less efficient miners may find it difficult to pay their costs and take their mining equipment offline.

Galaxy analysts believe that after Bitcoin block rewards were halved in April, it will be difficult for most old mining machines to break even, prompting miners to take them offline.

Looking at historical public data, in 2023, the 7-day average hash rate soared from 255 EH/s to 516 EH/s, an increase of 102%.

This surge in hash rate partly reflects the rise in Bitcoin prices, and the other part reflects the company's purchase of more efficient mining equipment to respond positively to the market.

Currently, declining revenues and rising costs associated with purchasing new equipment are putting miners in a difficult situation.

Bitcoin ETF reduces selling pressure

Halving is often seen as the pinnacle sign of a bull market, and the market will release a round of selling pressure when the incident hits.

Historical data shows that after two halving cuts in 2016 and 2020, the price of Bitcoin has experienced a sharp decline adjustment of about 30%.

This year, however, was different. Bitcoin spot ETFs approved for listing by the US Securities and Exchange Commission (SEC) in January 2024 may affect the price trend after the halving.

In the first quarter of spot Bitcoin ETF trading, the total capital inflow for 11 products approved by the US Securities and Exchange Commission (SEC) reached about $12.1 billion, absorbing a significant portion of the potential selling pressure after the halving. To a certain extent, Bitcoin ETFs balance the selling pressure brought about by Bitcoin's halving with attracting new capital.

Editor/jayden