The fourth “halving” of Bitcoin has concluded, marking a milestone in the cryptocurrency’s history. Although the token’s price experienced a slight decrease from its all-time highs last Friday, the market reaction has been relatively calm so far. Bitcoin surpassed $63,000 shortly after the halving, which officially occurred after the mining of block 840,000 on the blockchain.
The halving is a crucial event in the Bitcoin ecosystem that cuts in half the reward that cryptominers receive for completing a block, this time from 6.25 to 3.125 bitcoins. This process is essential to maintain the scarcity of Bitcoin and control its supply, as approximately 95% of bitcoins have already been issued. Satoshi Nakamoto, the creator of Bitcoin, designed this cryptocurrency with a fixed supply, unlike fiat currencies.
The main objective of the halving is to create a deflationary economic environment by limiting the supply of bitcoins, which can potentially increase their long-term value. As all bitcoins are minted (a process that will end in the year 2140, according to various estimates), cryptominers will rely exclusively on transaction fees for their income.
Previous halvings have preceded new bitcoin booms, although their immediate impact on price has been moderate. However, this time the market seems to have anticipated the halving, given the significant rise in the price of Bitcoin in 2024. The fact that the halving occurs shortly after a historical high for Bitcoin is unprecedented and may have influenced its recent surge.
In addition to the halving, other factors that may have contributed to the increase in the price of Bitcoin are the interest rate cuts announced by the Federal Reserve of the United States in 2024 and the introduction of new exchange-traded funds that can directly acquire and hold bitcoins.
Despite the arrival of investment funds to Bitcoin, its price has experienced a slight drop in the last month, reaching around $63,000 at the end of last week. However, the shares of Bitcoin mining companies, such as Marathon Digital Holdings Inc. and Riot Platforms Inc., experienced a notable increase on Wall Street after the halving, showing a more immediate impact on the sector.
