Halving is an event that occurs every four years in the Bitcoin network and leads to a halving of the mining rate. That is, every four years, there is a planned reduction in Bitcoin. The next halving is scheduled for the end of April 2024.
One of the main reasons why halving has such a significant effect on the price of Bitcoin is the creation of a scarcity of the cryptocurrency in the market. When the mining rate decreases, the number of new coins entering circulation also reduces. This creates a shortage in the market and, consequently, increases the price of Bitcoin.
Each halving becomes a kind of trigger for the growth of Bitcoin’s price. Past halvings confirm this trend – after each of them, Bitcoin reached new all-time highs (as clearly shown in the screenshot above). This is because halving attracts investor attention and increases demand for Bitcoin while simultaneously reducing supply — a perfect formula for big players.
It is worth noting that each time, the asset’s growth slowed down, and after the 2020 halving, BTC even crashed by 60%.
Therefore, the short-term impact is difficult to predict. However, in the medium term, we can expect another increase in the asset’s value to peak levels.