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Bitcoin halving handbook: A primer for institutional investors

The next Bitcoin halving will happen in mid-April 2024. This event will cut in half the amount of bitcoin awarded to miners for validating transactions. Below, we outline how bitcoin has performed in prior halvings and what investors need to know.

March 20, 2024

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Key takeaways

  • Bitcoin’s prior halvings took place in November 2012, July 2016, and May 2020. Because halvings reduce the supply of new bitcoins, they are often viewed as bullish for the price of BTC.
  • Price action around prior halvings supports this view: bitcoin gained an average of 61% in the six months leading up to prior halvings, and rose an average of 348% in the six months after halving.
  • But, by digging deeper into these numbers, it’s clear that not all halvings are created equal.

Written by

  • Coinbase Institutional

Overview

The next Bitcoin halving will happen in mid-April 2024. This event will cut in half the amount of bitcoin awarded to miners for validating transactions. Halvings are an important feature of the Bitcoin network’s design that are meant to limit inflation by reducing the supply of new bitcoins entering circulation.

Halvings take place each time 210,000 blocks have been mined, which happens roughly every four years. The upcoming halving will be the fourth in Bitcoin’s history. Because the halving takes place automatically when a specific block is mined, in this case the 840,000th block, the exact timing is variable (dependent upon the network’s hash rate). When the next halving takes effect, miners’ block rewards will drop from 6.25 BTC to 3.125 BTC.

Halvings will continue to take place on the same schedule until all 21 million bitcoin have been mined, which is estimated to happen sometime around the year 2140. The fixed halving schedule affords bitcoin its unique status as a programmatically disinflationary asset.

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