What is Bitcoin Halving and how to take advantage of the date

O Halving of Bitcoin, scheduled for 2024, could be an excellent investment opportunity. The event takes place every four years and directly affects the price of cryptocurrency. We will explain what the halving, how it works and its impacts, so you can take advantage of this chance.

What is Bitcoin Halving

To understand the function of halving, you need to know how bitcoin mining works. Cryptocurrency mining is a computational process that uses high processing power to validate transactions in the blockchain of currency — in this case, bitcoin — and add new blocks to this digital ledger.

Miners compete against each other to solve complex mathematical calculations and be the first to find the correct solution, which allows them to record a set of transactions in a new block. As a reward, they receive their payment in bitcoins as programmed in the cryptocurrency code.

This computational effort is essential to maintain the security of the network, as it keeps a reliable version of the ledger distributed among all of us, the participants, updated. But it requires a high cost of electrical energy to power powerful mining equipment. Thus, rewards function as an economic incentive so that there are always miners willing to keep the bitcoin network operating in a reliable and decentralized way. Without them, transactions would not be processed and the accounting record would be inactive.

O halving of bitcoin is a periodic event that occurs every four years and causes great impact. The word halving comes from the English term half, which means half. It is a halving the reward given to miners by the process of mining new blocks on the bitcoin blockchain.

This process is essential to guarantee the scarcity of bitcoin, because the supply of new coins is limited and decreases with each passing year. halving. With a fixed limit of 21 million units of the cryptocurrency, each halving brings bitcoin closer to its maximum supply, increasing its scarcity and potential value per unit.

This process was created by the anonymous programmer known as Satoshi Nakamoto back in 2008, when he launched the white paper where he first presented the idea of ​​bitcoin. The intention was to ensure that the supply of this digital currency always had a predictable and limited schedule.

Until 2009, each mined block yielded 50 BTC. In the first halving, in 2012 this reward dropped to 25 BTC. In the second, in 2016, it went from 25 to 12,50 BTC. In the last event, in May 2020, it dropped to 6,25 BTC.

Now in April 2024, it is predicted to fall once again by half, reaching 3,125 BTC. This process will continue until the maximum number of 21 million bitcoins is reached, which should occur around the year 2140.

Impact of halving on Bitcoin appreciation

Historically, it is quite common for the price of bitcoin to increase significantly in the months following each halving. In the first event, in November 2012, BTC jumped from $12 to $648 in four years. In the second, in July 2016, it rose from US$648 to US$2.500 just one year later, achieving an increase of 284%.

Already after the last halving, in May 2020, the appreciation was even more significant: from US$8.572 at the event to a record US$68.990 in November 2021, an incredible increase of more than 700%. Many experts attribute these increases to the planned decrease in cryptocurrency supply after each halving.

These periodic events play a very important role in maintaining the supply and demand balance of bitcoin. By halving the entry of new currencies every given period, they maintain the finite and deflationary character desired by Satoshi Nakamoto.

This is because it maintains a predictable supply of the cryptocurrency over time, eliminating the possibility of runaway inflation. As demand tends to remain stable or increase, the reduction in supply causes fewer bitcoins to be made available on the market each cycle, boosting their price.

O halving of bitcoin not only affects the price of the currency, but also generates debates about the sustainability of the network, the energy efficiency of cryptocurrency mining and the progress of blockchain. These discussions drive improvements in the sector, promoting technological advancement and increasing awareness of environmental issues.

What is the date of the next Bitcoin halving?

The next halving of bitcoin is expected between days April 20th and 22th, 2024.

It is not possible to know when the halving of bitcoin precisely, as the event occurs every 210.000 new blocks on the blockchain, that is, when we reach block 840.000, the fourth block will be completed halving.

For investors, it is a unique opportunity, however, each macroeconomic context is also unique and does not guarantee the same results as in the past. Even so, appreciation is expected due to greater global adoption of bitcoin, the recent approval of cryptocurrency ETFs in the US, inflation and advances in blockchain technology.

However, it is important to be aware of volatility. See below how to participate in the event safely and successfully.

How to participate in Bitcoin Halving 2024?

O halving is undoubtedly an exciting opportunity for cryptocurrency investors, but it requires preparation, diversification and emotional control to enjoy it safely. Those who know how to take advantage of this opportunity can achieve remarkable results in the coming years.

To participate in the event effectively, consider our suggestions:

• Adopt a gradual bitcoin accumulation strategy: It is recommended to start accumulating bitcoins before the halving, as the reduction in supply can cause an increase in demand and, consequently, an appreciation of the digital asset. This strategy is especially relevant for investors looking to take advantage of fractions of bitcoin, known as satoshis, accumulating them over time;
• Be aware of market volatility: With the decrease in block rewards, miners will need to closely monitor the price fluctuations to more accurately estimate your revenue. Bitcoin price volatility can directly impact miners' earnings, affecting their resource allocation decisions;
• Watch the price trend: Historically, the price of bitcoin tends to increase in the months following halving previous ones. Observe the price trend before and after the halving can be used to make investment decisions;
• Evaluate mining difficulty: after the halving, mining difficulty may vary as profitability decreases. This could lead some miners to abandon their activity, affecting the dynamics of the network. It is important to be aware of these changes and their potential impact;
• analyze the Hash Rate: o hash rate represents the amount of computing power dedicated to mining bitcoins, and can be a important indicator to assess the health and security of the network. After halving previous ones, the rate of hash typically suffered a decline. Keep an eye.

Furthermore:

• Consider investing in mining companies: companies with large bitcoin mining farms, having high computational capacity, tend to appreciate in value after each halving. purchase of shares in these companies on international stock exchanges it is an option;
• Purchase Mining Equipment: after the halving, when the price of bitcoin tends to rise, equipment such as ASIC video cards become more valuable. It is possible to purchase them for enter the mining industry or speculate on its future resale;
• Take advantage of the temporary price drop: in the days before the halving, a small correction in the bitcoin price is common due to profit taking. That is one opportune time to acquire cryptocurrency at lower prices before the possible later rally;
• Investing in bitcoin funds and ETFs: ETFs (Exchange-Traded Funds) are financial instruments that they follow the price of bitcoin and can be traded on stock exchanges like shares. Funds and ETFs that include bitcoin in their composition generally perform excellently in the months following the halving, offering a more accessible way to expose yourself to the asset;
• Consider stking e yield farming: Some blockchains reward users who participate in the staking e yield farming in their protocols. Staking involves keeping a certain amount of cryptocurrency in a wallet to support network operations, while yield farming is the process of earning additional rewards by using crypto assets on various DeFi (decentralized finance) platforms. after the halvingThe altcoins in these networks they tend to value themselves;
• Follow analysis and news: close to halving, there is a large production of reports and forecasts by experienced analysts. Keeping an eye on key recommendations and trends can be valuable in making informed investment decisions;

This way, you will be able to identify the best strategies and opportunities generated by the event, and take advantage of the expected appreciation in the price of bitcoin in the medium term. Planning and execution are key to profiting from this cyclical movement, ok?

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Source: Reuters, Binance, Bitcoin Market, Examination

Text proofread by: Pedro Bomfim