The 19 April 2024 halving has decreased the reward to 3.125 Bitcoins. Each halving event has historically been followed by significant bullish trends in the Bitcoin market. However, investors should approach these correlations with caution.
The latest Bitcoin halving just occurred on 19 April 2024. This key event in the cryptocurrency’s supply mechanism is not only a testament to the ingenuity of Satoshi Nakamoto’s creation but also a pivotal moment that could shape the future trajectory of Bitcoin’s value and its acceptance in the broader financial landscape.
Bitcoin halving is a fundamental event programmed into the cryptocurrency’s code, designed to occur approximately every four years. The event halves the reward that miners receive for verifying transactions and adding new blocks to the Bitcoin blockchain, thereby slowing the rate at which new Bitcoins are created.
Mimicking the extraction rate of precious resources like gold, this process is Nakamoto’s solution to creating a deflationary digital currency. The primary objective of halving is to control inflation. Unlike fiat currencies, where central banks can adjust supply based on economic needs, Bitcoin maintains a predictable issuance rate, making it a deflationary asset by design.
Since its inception, Bitcoin has undergone three halvings:
The 19 April 2024 halving has decreased the reward to 3.125 Bitcoins. Each halving event has historically been followed by significant bullish trends in the Bitcoin market. However, investors should approach these correlations with caution.
Chart 1: Bitcoin price trends and halving points
Source: Bitcoin Halving Cycles, Tradingview.com, 2 March 2024
The cryptocurrency industry has matured significantly in recent years, with the development of regulatory and legal frameworks in major markets such as the US, UK, UAE, Canada, France, Germany, Hong Kong, Japan, Singapore, Spain, and Switzerland.
Australia is also on the verge of implementing licensing and custody rules. This regulatory progress reflects the market’s resilience and an ongoing pursuit of innovation, setting a foundation for a balanced approach that mitigates risk while fostering opportunity.
Clear regulatory guidance is becoming the cornerstone of renewed stability, vital for the sustainable growth of the sector and is driving crypto adoption by the largest financial institutions in the world.
Chart 2: Crypto adoption by institutions
Source: Crypto Market Review Q4 2023, Bitwise Investments, January 2024
In the financial markets, this maturity is evident as Spot Bitcoin exchange-traded funds (ETFs) amassed net inflows of approximately $12.1 billion by the end of the first quarter of 2024. Remarkably, these gains were achieved in less than three months since the ETFs commenced trading on 11 January 2024. The introduction of these funds has been pivotal in boosting demand for Bitcoin, contributing to its price surges and setting new records.
Should Bitcoin replace gold or become a staple in traditional investment portfolios, its impact on price could be significant. At today’s prices, with the total market value of all gold estimated at over $15 trillion, and Bitcoin's market capitalisation at $1.25 trillion, the potential for growth is immense.
The increasing legitimacy of Bitcoin and cryptocurrencies, evidenced by clearer regulatory frameworks and their integration into traditional financial products like ETFs, signals that these digital assets are here to stay and destined for mainstream adoption. Bitcoin halving continues to be a critical event within the crypto landscape, shaping both market dynamics and the broader financial narrative, ensuring Bitcoin’s role as a significant player in the future of global finance.
Note: This article is neither financial advice nor an endorsement or recommendation to purchase or invest in Bitcoin or in any cryptocurrency and /or the use of any platforms they may be associated with. Crypto assets are unregulated and highly speculative. You risk losing some or all of your capital. There is no or limited consumer protection at this time.
Until next month,
Managing Director
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