The Bitcoin Halving is Here: What Does it Mean for Investors?

The highly anticipated bitcoin halving is about to happen, happening once every four years. While the exact date is uncertain, it's believed to take place either today or tomorrow. This marks bitcoin's fourth halving, which will result in miners receiving half the reward they previously did for adding new blocks to the blockchain. As a result, there will be fewer new BTC introduced to the system, bringing us closer to the 21 million maximum threshold of circulating units mined.

In November 28 of 2012, the first halving occurred and this happened after the first 210,000 blocks were produced. On this event, the prize was cut down to 25 coins for every new block. Then, after another 210,000 blocks, the prize was reduced again to 12.5 bitcoins on July 9 of 2016 and to 6.25 on May 12 of 2020. The upcoming halving will cause another drop in the prize from 6.25 to 3.125 BTC. This process will go on until the year 2140, when the last halving will take place, causing all 21 million tokens to be available in the market.

When the reward for constructing new blocks on the blockchain is decreased, which involves using powerful computers and consuming a lot of energy, the motivation to generate more bitcoins is lowered. This event, known as "halving," has caused a decrease in the supply of bitcoins in the past, which then increases interest and speculation within the crypto industry.

Usually, dividing (halving) has caused prices to go up in the past. Research conducted by CoinLedger, a consultancy for taxes related to cryptocurrencies, has shown that the value of BTC increased by 51% and 83% respectively in the six months following the last two halvings. However, it is essential to note that the value of bitcoin during those times was significantly lower than it is now. During the 2016 halving, one BTC was valued at $650, whereas in 2020, it is valued at $8,572.

A Unique Bitcoin Halving Expected

A recent report from 21Shares, the first issuer of ETPs on cryptocurrency in Europe, suggests that the upcoming halving event will occur in a market environment that has never existed before. This requires a new analysis of the potential effects of this event on the industry.

Experts have reported that the impact of bitcoin's four-year halving has been getting weaker over time. This means that as each halving event occurs, the increase in bitcoin's value growth rate gets smaller. To illustrate, after the first halving, BTC experienced a mind-blowing surge of 5,500% in four years. However, in the second halving cycle, it only increased by about 1,250%. As for the current cycle, BTC gained approximately 700% in value.

Bitcoin has reached its highest level to date this year, which is different from previous times when it underwent halving. In the past, it usually traded 40 to 50 percent lower than previous highs.

An unpredictable factor during this period has been the introduction of exchange-traded products for cryptocurrencies in the United States. According to 21Shares, the trading volumes for BTC spot ETFs were astronomical and indicated a strong desire from conventional investors. On March 13, 2024, the inflows reached a new peak of over $1 billion in a single day.

Are you wondering if you can purchase a Bitcoin exchange-traded fund (ETF) in the United Kingdom? In case you are curious, an ETF tracks the performance of a particular asset or group of assets while also being tradeable on a stock exchange. Essentially, an ETF combines the benefits of mutual funds with the convenience of buying and selling shares on a stock exchange. Bitcoin ETFs have been talked about for a while now, but as of yet, none have been approved by regulators in the UK or the United States. Currently, there are no Bitcoin ETFs available to purchase in the UK. However, there are a few companies that offer cryptocurrency investment trusts which can be bought through traditional brokerage accounts. It's worth noting that investing in cryptocurrency can be risky, so it's important to do your research before making any investment decisions. Additionally, be sure to consult with a financial advisor if you're unsure about investing in cryptocurrencies or any other type of investment. In conclusion, at this time, there are no Bitcoin ETFs available for purchase in the UK. However, it is still possible to invest in cryptocurrency through other means. Remember to always conduct thorough research and seek professional advice before making any investment decisions.

In conclusion, the researchers argue that the participation of big organizations is altering the general behavior of those who invest in bitcoin. The significance of individuals who hold onto their bitcoin for extended periods of time is growing, and there is currently a reduced amount of bitcoin being stored on exchanges compared to the past five years.

According to the analysts, if the current pattern continues, the availability of bitcoin would become less fluid, leading to a shortage in supply and possibly resulting in a substantial hike in value.

In this blog post, 21Shares is expressing positivity towards bitcoin's future. However, it's important to note that the current supply and demand factors surrounding bitcoin are distinctly different from those in the past.