Bitcoin halving mechanism: the secrets behind it and future prospects

As digital currencies are developing rapidly, Bitcoin, as the most representative cryptocurrency, has become the focus of global investors. Among them, the mechanism of halving every four years has triggered extensive discussions and thinking. So, why does Bitcoin halve every four years? What economic principles and market logic are hidden behind this mechanism? And how long will it take for Bitcoin to halve for the fourth time? This article will explore these issues from multiple perspectives and unveil the mystery of Bitcoin's halving mechanism for you.

The halving mechanism of Bitcoin is derived from the rules set by its founder Satoshi Nakamoto when designing it. The total amount of Bitcoin is capped at 21 million. The original intention of this design is to prevent inflation and maintain the scarcity of currency. Every time a miner successfully mines a block, he will receive a certain amount of Bitcoin as a reward, and this reward will be halved after every 210,000 blocks. This design not only gradually reduces the supply of Bitcoin, but also encourages miners to continue to participate in the maintenance of the network. This scarcity and gradual reduction mechanism make Bitcoin have good value storage characteristics for a long time.

The first Bitcoin halving took place on November 28, 2012, when the block reward was reduced from 50 Bitcoins to 25. It is easy to imagine the impact this change had on the market. Many investors entered the market, causing the price of Bitcoin to soar rapidly in the following months. Then on July 9, 2016, the second halving further reduced the block reward to 12.5 Bitcoins. History has once again proved that halving events are often accompanied by price increases, attracting more investors to pay attention to this market.

So why is the halving so important to the price of Bitcoin? First, the halving means a reduction in the supply of new Bitcoins, which naturally triggers a rise in prices in the supply and demand relationship. Second, as more and more Bitcoins are mined over time, the number of Bitcoins in circulation gradually decreases. Such scarcity makes investors who hold Bitcoin more confident, which in turn drives up prices. In addition, the halving event often becomes an important topic in the market, attracting media attention and investor discussion, which further drives market sentiment.

Currently, there is not much time left for Bitcoin's fourth halving, which is expected to occur around May 2024. This halving will reduce the block reward to 6.25 bitcoins, and the market generally expects that this will trigger another wave of investment. Many analysts believe that the halving event will make Bitcoin's scarcity more obvious, further enhancing its status as digital gold.

However, although the halving mechanism has proven its positive impact on prices many times in history, market changes are always full of uncertainty. The price of Bitcoin is not only affected by the halving event, but also by other factors such as policy changes, market sentiment, and technological progress. In addition, as more and more competitors emerge, Bitcoin's market position is also facing challenges. Therefore, while investors pay attention to the halving event, they also need to look at the complexity of the market rationally.

The Bitcoin halving mechanism is not only an economic phenomenon, but also a manifestation of social psychology. After experiencing the price increase after the previous halvings, many people have formed an expectation for the halving event. This mentality has driven investors' behavior to a certain extent, forming a self-reinforcing effect in the market. Therefore, the halving is not only a technical event, but also a manifestation of investor confidence.

In the future, as the Bitcoin network continues to develop and improve, the halving mechanism may also receive more attention and discussion. Many people are beginning to wonder whether the halving will have an impact on the long-term development of Bitcoin. For example, as the block reward decreases, the income of miners will be directly affected. Will it cause some miners to exit the market, thus affecting the security and stability of the network? These are all issues worth exploring in depth.

In general, Bitcoin's halving mechanism is an important and unique part of its design, with profound economic principles and market logic behind it. As time goes by, the market's reaction and impact on halving will continue to be the focus of investors. Facing the upcoming fourth halving, investors should not only pay attention to price fluctuations, but also rationally analyze market changes and potential risks.

The future Bitcoin market will continue to attract more investors under the guidance of the halving mechanism. Each halving is a new opportunity and challenge. How to seize this opportunity will test the wisdom and decision-making ability of investors. No matter how the market changes, staying rational and calm is the key to success. I hope that every investor can find his own value and opportunity in the world of Bitcoin.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Coin Circle (120BTC.coM) News: This year is a "leap year" that occurs once every four years, which means there will be one extra day in February of 2024. As for the reason? That's because it takes about 365.24 days for the earth to orbit the sun (i.e. one solar year).
However, our calendar year only has 365 days. To make up for this discrepancy, it was decided to add an extra day, February 29, every four years so that the calendar year would be in sync with the solar year.
 Why does Bitcoin halve every four years?
Now that you understand the calculations of the calendar, have you ever wondered why Bitcoin halving also occurs every four years?
We know that by halving the Bitcoin mining reward (mining rewards drop to zero in 2140), the supply of new Bitcoins can be controlled and help BTC become a scarce and valuable asset.
As for why halving occurs every four years? That’s because Nakamoto designed that halving will occur every 210,000 blocks (one block every 10 minutes on average), so the next Bitcoin halving is expected to occur in April 2024, when the block height reaches 840,000.
 How long is it until the fourth BTC halving?
According to the latest data from BitcoinBlockHalf, there are about 53 days left until the Bitcoin halving, when the reward for each block will drop from the current 6.25 to 3.125.
So far, three halvings have occurred, in 2012, 2016, and 2020.
 Review of past halving trends
The reason why Bitcoin halving can become a bull market narrative is that its scarcity will increase, so the market believes that it will help push up the price of the currency. However, according to statistics, in the past, halving usually does not immediately trigger a rise in Bitcoin prices, and it takes several months to a year and a half to ferment:
 First halving: 2012, about 12 months after the peak (November 2013), the price of the currency increased by 8450%
 Second halving: 2016, about 17 months after the peak (December 2017), the price of the currency rose by 290%
 Third halving: In 2019, about 18 months after the peak (November 2021), the price of the currency rose by 560%
 Is every rise in Bitcoin really related to halving?
Coinbase analyst David
Duong previously wrote a report summarizing the background of Bitcoin’s past three halvings, pointing out that Bitcoin’s halving events happened to coincide with some important historical monetary and fiscal policies:
 In 2012, the Federal Reserve began purchasing mortgage-backed securities and long-term Treasury bonds for its third round of quantitative easing (QE3).
 In the second half of 2016, Brexit sparked fiscal concerns in both the EU and the UK, leading to an increase in BTC purchases.
 In 2020, central banks and governments responded to the COVID-19 pandemic with unprecedented fiscal stimulus, which pushed up global liquidity.
Therefore, he believes that in addition to paying attention to the supply and demand dynamics of BTC, investors must also have a clear understanding of the market background and need to understand the impact of the US dollar trend, interest rates and global liquidity.
“Except for the third halving, the evidence from these halving events supporting Bitcoin’s price action is not entirely clear.”
 VanEck analyst: Bitcoin will hit a new high by the end of this year
VanEck analysts estimated in December last year that the passage of a Bitcoin spot ETF, coupled with the halving event, would encourage Bitcoin to hit a record high in the fourth quarter of this year.
As can be seen from the figure below, VanEck defines Bitcoin's fourth cycle as 2022-2025 and divides it into three scenarios (Low, Moderate, Bullish). In the Bullish (bull market), VanEck estimates that Bitcoin will reach a cycle peak of $160,000.
But whether history can really repeat itself will take time to prove. Dongqu reminds investors to do a good job of risk control.