The quantity of traditional currencies in circulation increases and decreases under the strict surveillance of the world's central banks. In contrast, the maximum quantity of Bitcoin is permanently set and cannot be altered. The cap for Bitcoin is set at 21 million, of which slightly over 19 million have already been mined. This leaves fewer than 2 million Bitcoins still to be mined. The Bitcoin system is designed to decrease the amount of new coins generated with every new block through a mechanism known as halving. Explore all you need to understand about the When Is The Next Bitcoin Halving?
An illustration of a man in a miner's hat and overalls using a pickaxe to break into a giant Bitcoin.
Bitcoin halving, also referred to at times as 'halvening,' is an event in which the reward for mining new blocks is reduced by half, which means miners get 50% less bitcoins for processing transactions.
These halving events are predetermined to take place every 210,000 blocks, or approximately every four years, continuing until the total supply reaches 21 million bitcoins.
For traders, bitcoin halvings are significant because they cut down on the amount of new bitcoins entering circulation. This reduction in new coin supply can lead to price increases if demand does not wane.
Though in the past, bitcoin's value has seen a significant increase around the time of halvings, it's important to note that each halving event occurs under unique circumstances and bitcoin's demand can vary greatly.
The forthcoming bitcoin halving is anticipated to take place in April 2024, upon reaching 740,000 blocks. This event will reduce the block reward from 6.25 to 3.125 bitcoins. The precise timing of the halving remains uncertain because the rate of new block creation fluctuates, with the network aiming for an average of one block every ten minutes.
There are primarily two strategies for trading around the bitcoin halving event. Investors can either speculate on bitcoin's price movements through derivative products like CFDs or opt for direct purchase of bitcoin through exchanges. Explore the ins and outs of cryptocurrency trading to understand how it operates.
Set up a live trading account or start with a demo to practice.
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Trading cryptocurrencies via derivatives like CFDs offers significant advantages, as it eliminates the need for direct ownership of the cryptocurrency. This approach allows you to:
Trade without needing an exchange account or digital wallet -With IG, getting started and placing trades can be done swiftly, bypassing the need for direct cryptocurrency ownership or a wallet.
Position yourself according to bitcoin's market movement -Derivatives enable you to speculate on both upward and downward price movements of bitcoin.
Leverage your trades -By using leverage, you can open positions with a modest deposit, known as margin. This approach provides exposure to a larger portion of the market with a relatively small capital outlay, enhancing the potential for profit as well as risk.
The last bitcoin halving occurred on May 11, 2020, reducing the mining reward by 50%, from 12.5 new bitcoins per block to just 6.25 bitcoins. This reduction in supply led to a bullish outcome for the cryptocurrency, with its price climbing from $6,877.62 on April 11 (one month before the halving) to $8,821 at the event.
Despite experiencing considerable volatility, bitcoin's price soared over the next year, reaching $49,504 by May 11, 2021.
This pattern of a significant price increase following the halving, followed by a notable decline around 12-17 months later, has been consistent with previous halvings in 2012 and 2016. Yet, even after these declines, the price of bitcoin remained significantly higher than before the halving events.
Nonetheless, whether such a price increase occurs will hinge on the demand dynamics during the halving period. It's important to note that a rise in demand isn't guaranteed to happen – or even to stay the same.
Since the last halving in 2020, the cryptocurrency market has evolved considerably, with a plethora of well-established digital currencies now vying for investor attention.
Embedded within the bitcoin network's foundational blockchain protocol is a mechanism that controls the pace at which new bitcoins are generated. This protocol obliges network computers to engage in a competitive process called 'mining' to validate transactions.
Miners are compensated with new bitcoins when they successfully confirm that the transactions they've chosen to process are legitimate. These transactions are grouped into 'blocks.' The blockchain is programmed to cut the miners' reward by half every 210,000 blocks, a process known as a bitcoin halving.
The halving mechanism in Bitcoin's design occurs every four years to preserve the cryptocurrency's scarcity and act as a hedge against inflation. By diminishing the supply while assuming consistent demand, the expectation is that Bitcoin's value will increase, safeguarding it from the inflationary depreciation that affects traditional assets.
Mitigating the risks tied to bitcoin trading can be achieved by leveraging CFDs to speculate on the cryptocurrency's price fluctuations. Utilizing these derivatives allows you to benefit from bitcoin's price changes without actually holding the coins, thereby avoiding the risks that come with managing an exchange account or a wallet.
Indeed, profiting from the BTC halving can be achieved by speculating on the price fluctuations of bitcoin in the period leading up to and following the event. Utilizing contracts for difference (CFDs) is a favored approach for this, as they allow for both long and short positions on bitcoin's price.
The anticipation around "when is the next bitcoin halving" underscores its significance in the cryptocurrency ecosystem. As this event approaches, understanding its implications on supply, demand, and ultimately, price, is crucial for both seasoned investors and newcomers alike.
The next bitcoin halving represents not just a technical adjustment, but a pivotal moment that could shape the future trajectory of bitcoin's value. Engaging with this event through informed speculation or strategic investment positions individuals to potentially capitalize on the shifts it brings to the crypto market.