Home Economy News Explainer-What is bitcoin’s ‘halving’, and does it matter?

Explainer-What is bitcoin’s ‘halving’, and does it matter?


Explainer-What is bitcoin’s ‘halving’, and does it matter? By Reuters

Breaking News



Published Mar 13, 2024 08:51AM ET

© Reuters. FILE PHOTO: Representations of cryptocurrency Bitcoin are seen in this illustration picture taken in Paris, France, March 9, 2024. REUTERS/Benoit Tessier/Illustration/ File Photo

LONDON (Reuters) – As bitcoin’s price reaches new heights, attention is turning to its upcoming “halving” and whether it is playing a role in its ascent. 

Depending on where you sit, the halving is a vital event that will burnish bitcoin’s value as an increasingly scarce commodity, or nothing more than a technical change talked up by speculators to inflate its price. 

But what exactly is it, and does it really matter?


The halving is a change in bitcoin’s underlying blockchain technology, designed to reduce the rate at which new bitcoins are created.

Bitcoin was designed from its inception by its pseudonymous creator Satoshi Nakamoto to have a capped supply of 21 million tokens. 

Nakamoto wrote the halving into bitcoin’s code and it works by reducing the rate at which new bitcoin are released into circulation.

So far, about 19 million tokens have been released.


Blockchain technology involves creating records of information – called ‘blocks’ – which are added to the chain in a process called ‘mining’.

Miners use computing power to solve complex mathematical puzzles to build the blockchain and earn rewards in the form of new bitcoin.

At the halving, the amount of bitcoin available as rewards for miners is cut in half. This makes mining less profitable and slows the production of new bitcoins.

(For a visual explanation of how blockchain works, click here.) 


There is no set date, but it is expected to take place in late April.

The blockchain is designed so that a halving occurs every time 210,000 blocks are added to the chain. This means it happens roughly every four years.


Some bitcoin enthusiasts say that bitcoin’s scarcity gives it value.

The lower the supply of a commodity, then all other things being equal the price should rise when people try and buy more.

So reducing supply of bitcoin should lift the price, some analysts and traders say. 

Others dispute the logic, noting that any impact would have already been factored in to the current price.

The supply of bitcoin to the market is also largely down to crypto miners but the sector is opaque, with data on inventories and supplies scarce.

If miners sell their reserves, that could put downward pressure on prices.

Knowing what is behind a crypto rally is hard, not least as there is far less transparency about who is buying and why relative to other markets.

The most common reason given for this year’s surge is the U.S. Securities and Exchange Commission’s January approval of bitcoin ETFs, as well as expectations that central banks will cut interest rates.

But in the speculative world of crypto trading, explanations given by analysts for changes in bitcoin’s price can snowball into market narratives that can become self-fulfilling. 


There’s no evidence to suggest that previous halvings have caused bitcoin’s price to rise.

Still, traders and miners have studied past halvings to try and gain an edge.

When the last halving happened on May 11, 2020, the price rose around 12% in the following week.

Later in the year, bitcoin began a sharp rally, but there were lots of explanations – including loose monetary policy and stay-at-home retail investors spending spare cash on cryptocurrencies – for this and no real evidence the halving was behind it.

An earlier halving occurred in July 2016. Bitcoin rose around 1.3% in the following week, before plunging a few weeks later.

In short: it’s hard to isolate the impact, if any, halvings may have had in the past or predict what could happen this time around.

Regulators have repeatedly warned that bitcoin is a speculative market, driven by hype and “FOMO” (Fear Of Missing Out), and poses real harm to investors, even as they simultaneously approve bitcoin trading products.

Explainer-What is bitcoin’s ‘halving’, and does it matter?

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News