Bitcoin halving: what you need to know

The most recent Bitcoin (BTC) halving occurred on 11 May 2020. When bitcoin has halved in the past, price fluctuations usually follow. We look at what bitcoin halving is and how it can impact your cryptocurrency portfolio. We'll analyse BTC halving from a technical and fundamental perspective to give insight into what could happen in the future and how to trade it.

What is bitcoin halving?

Bitcoin halving is an event where the block reward for mining new bitcoin is halved, meaning that bitcoin traders will receive 50% less bitcoin for every transaction they verify. BTC halving occurs every 210,000 blocks, which equates to a halving occurring approximately every 4 years.

Although this can sound confusing with concepts such as ‘block reward’ and ‘verifying transactions’, bitcoin halving is a relatively simple process.

When a block of bitcoin is successfully mined, the bitcoin miner receives a block reward – essentially a BTC payment. However, the bitcoin halving process follows cryptocurrency economic theory. As bitcoin has a finite amount and its supply is reduced over time, the price of bitcoin can be kept ‘stable’ and deflationary by reducing the overall supply – this is why bitcoin halving exists.

bitcoin cryptocurrency coin placed on hard drive

Bitcoin halving 2020

The most recent bitcoin-halving event occurred on the 11th May 2020, after block 630,000 was mined. Beforehand, 12.5 bitcoins were rewarded to miners per block. However, this decreased to 6.25 BTC per block after the bitcoin-halving event in 2020.

Historical bitcoin halving dates

Bitcoin halving has occurred twice before. First in 2012, where the reward per block dropped from 50 to 25 bitcoins. Following this, another halving occurred in 2016, where the reward per block dropped from 25 to 12.5 bitcoins. See below for a more detailed explanation into the history of bitcoin halving and predictions for the future.

HalvingDateBlockBlock rewardMined in period% mined
BTC launch3 January 200905010,500,0050
Halving 128 November 2012210,000255,250,00075
Halving 29 July 2016420,00012.52,625,00087.5
Halving 311 May 2020630,0006.251,312,50093.75
Halving 4Expected 2024840,0003.125656,25096.875
Halving 5Expected 20281,050,0001.5625328,12598.4375
Halving 6Expected 20321,260,0000.78125164,062.599.21875

As you can see from the above table, the amount of bitcoin mined and the block reward drops by half at every halving event. By 2032, over 99% of bitcoin will have been mined and it is estimated to take up until 2140 until 100% of the total bitcoin is mined.

Bitcoin halving: technical analysis 

Technical analysts can use an array of tools, such as technical indicators, to forecast price movements in the bitcoin market before and after the next bitcoin halving. You can use our pattern recognition scanner to identify trading patterns that bitcoin traders often look for, such as ascending triangles, head and shoulders and Fibonacci retracements.

History of bitcoin-halving chart

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Bitcoin halving: fundamental analysis

Bitcoin halving is a trading indicator for fundamental analysts, as it’s a direct force that will impact the supply and demand of bitcoin. The halving process reduces the future supply of bitcoin by 50% for the next 210,000 blocks, when this process will repeat again. If demand stays constant, and this factor is not already priced into the market value of bitcoin, the value of bitcoin would rise. However, it's increasingly difficult to determine the intrinsic value of bitcoin due to its complexity.

How to trade on bitcoin halving

  1. Open a CMC trading account. You can trade bitcoin with a demo account to practise new trading strategies with virtual funds. Alternatively, you can open a live account if you are ready to trade with real money.
  2. Choose between spread betting or CFDs. Both trading products allow you to access and trade price movements on bitcoin. View the differences between spread betting and CFDs.
  3. Research the bitcoin market. Determine whether you speculate that bitcoin’s price will rise or fall. Make use of our platform features such as our pattern recognition scanner, which can search the bitcoin market for trading chart patterns.
  4. Create a bitcoin deal ticket. Choose to ‘buy’ or ‘sell’ bitcoin based on your research. Enter a position size then add stop-loss and take-profit orders in order to mitigate any additional risk based on your trading plan.
  5. Place the bitcoin trade. You can deposit just a percentage of the full trade value to open a position and control a larger sum. Please note that your profits and losses are magnified in line with your leverage ratio. Learn more about trading with leverage here.
  6. Close your position. Any profits from a spread bet are free from capital gains tax, while profits from CFD trades can be offset against losses for tax purposes.

Bitcoin halving: your questions answered

When is the next bitcoin halving?

The next bitcoin halving is estimated to occur some time in 2024. Bitcoin halving occurs when the 840,000th block is mined. This bitcoin halving will see the mining reward drop from 6.25 bitcoins per block to 3.125 bitcoins.

What happened last time bitcoin halving happened?

The last time bitcoin halving happened on 11th May 2020, block 630,000 was mined. This saw the mining reward drop from 12.5 bitcoins per block to 6.25 bitcoins per block. Bitcoin also experienced some price fluctuations before, during and following its 2020 halving.

How will bitcoin’s price change following the next bitcoin halving? 

It’s impossible to predict future bitcoin price changes during the next halving period, just as it is impossible to attribute bitcoin halving to previous price changes. However, we can analyse the previous highs from bitcoin halving 1 and 2, where major price increases were evident:

Bitcoin launch to first halving: Price increases from $31.50 to $1,178 (3,700% increase)

First halving to second halving: Price increases from $1,178 to $19,800 (1,600% increase)

Second halving to third halving: TBC

While the above data is far from producing any meaningful projections or insights into the bitcoin’s price action, it simply showcases what has happened in the past. 

Summary

Bitcoin halving is a fundamental event that changes how much bitcoin is supplied from mining. Although it should not be used in solitary as a trading indicator, it can be used alongside other fundamental or technical analysis factors to help determine bitcoin’s future price action. Find out more about how to trade bitcoin.

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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