Bitcoin Halving: Key Mechanism, Price Cycles, and Market Impact

Bitcoin halving represents one of the most significant events within the cryptocurrency ecosystem. This phenomenon, known in English as “halving,” is fundamental to understanding Bitcoin’s monetary policy and how it influences its availability and potential value over time.

What is the Nature of the Halving?

Bitcoin halving is a preprogrammed mechanism that reduces the rewards miners receive for validating blocks on the network by half. This process has been embedded from the origin in the Bitcoin protocol and is automatically triggered every 210,000 mined blocks, which occurs approximately every four years. The purpose is to control inflation and ensure the progressive scarcity of Bitcoin.

In the most recent halving event, which took place on April 20, 2024, the block reward was reduced from 6.25 to 3.125 bitcoins. This milestone marked another crucial step toward the maximum supply limit of 21 million coins.

Key Data on the Halving

• Frequency: Every 210,000 blocks (approximately 4 years)
• Last reduction: April 20, 2024 (from 6.25 to 3.125 BTC per block)
• Next estimated reduction: Around April 2028 (reward to 1.5625 BTC)
• Total supply: Maximum of 21 million bitcoins
• Bitcoins mined until 2024: Approximately 19.5 million

Halving History Since 2012

Bitcoin has experienced four halving cycles since its inception:

First Event (November 28, 2012)

• Reward: 50 → 25 BTC
• Price at the time: ~$12
• Subsequent reaction: Six months later, the price reached ~$130

Second Event (July 9, 2016)

• Reward: 25 → 12.5 BTC
• Base price: ~$650
• Performance: Bitcoin reached ~$900 in the medium term, and later nearly $20,000 in December 2017

Third Event (May 11, 2020)

• Reward: 12.5 → 6.25 BTC
• Context: During the global pandemic
• Initial price: ~$8,821
• Recovery: Surpassed $15,700 in six months and reached ~$69,000 in November 2021

Fourth Event (April 20, 2024)

• Reward: 6.25 → 3.125 BTC
• Price: ~$63,652
• Context: Mature institutional market with Bitcoin Spot ETFs approved in the United States

Historical Correlation Between Halving and Price Movements

Historical data reveals a consistent pattern of appreciation following halving events:

• Year 1 after 2012: +9,520% increase
• 518 days after 2016: +3,402% increase
• 335 days after 2020: +652% increase

However, it is essential to recognize that correlation does not imply direct causation. Other factors such as global macroeconomic conditions, institutional adoption, regulatory changes, and technological advancements also play significant roles in price determination.

Impact on Mining Economics

Halving has profound consequences for mining operators. As rewards decrease, many less efficient operations or those with high energy costs become unviable and tend to shut down. This natural selection process strengthens the most efficient and well-capitalized operators.

After each halving, the network’s hash rate experiences a temporary drop but typically recovers when Bitcoin’s price improves and profitability is restored. This cycle stimulates technological innovation and motivates miners to seek cheaper energy sources and more efficient operational methods.

Controlled Scarcity: The Core of the Value Proposition

The halving mechanism guarantees a systematic reduction in the rate of new Bitcoin creation. In 2024, approximately 19.5 million bitcoins have been mined, leaving only around 1.5 million to be created over the next 116 years.

This programmed scarcity sharply contrasts with fiat currencies, whose supply can be arbitrarily adjusted by central authorities. Bitcoin’s decreasing emission curve is frequently cited as its most attractive feature for investors seeking a long-term store of value.

Supply and Demand Dynamics Post-Halving

Each halving creates what economists call an “supply shock.” After the 2024 halving, the number of bitcoins mined daily decreased from approximately 900 to 450 units.

If demand remains constant or grows—driven by institutional adoption, regulatory clarity, or positive macroeconomic cycles—this restricted supply could potentially contribute to price appreciation over time.

Cascading Effects in the Broader Crypto Market

Bitcoin halving events generally attract significant attention to the entire cryptocurrency ecosystem. The increase in Bitcoin’s price during these periods often spills over into other digital assets (altcoins), fostering greater awareness and investment in the overall crypto market.

Some miners may reallocate resources toward other proof-of-work cryptocurrencies that offer better reward-to-difficulty ratios post-halving, influencing the price dynamics across the sector.

Projected Schedule of Future Reductions

Bitcoin’s protocol indicates that reductions will continue every 210,000 blocks until the issuance of the 21 million coins is exhausted:

• 5th Reduction (2028): 3.125 → 1.5625 BTC
• 6th Reduction (2032): 1.5625 → 0.78125 BTC
• 7th Reduction (2036): 0.78125 → 0.390625 BTC
• 8th Reduction (2040): 0.390625 → 0.1953125 BTC

The last bitcoin is projected to be mined around the year 2140, at which point mining will rely solely on transaction fees as incentives.

Investment Perspectives Ahead of the Halving

Common Strategies

Dollar Cost Averaging (DCA) Regularly buying small amounts regardless of fluctuations, avoiding attempts to time the market.

Long-Term Holding Maintaining positions through volatility, focusing on potential appreciation driven by increasing scarcity.

Diversification Spreading risk by investing in multiple digital assets, leveraging broader crypto market movements.

Technical and On-Chain Analysis Adjusting exposure based on technical metrics, on-chain indicators, and market sentiment during pre- and post-halving periods.

( Time Horizon: Short vs. Long Term

Short-term traders aim to capitalize on fluctuations around the event, buying in anticipation or selling at enthusiasm peaks. However, this strategy requires precise market timing, which is notoriously difficult.

Long-term investors focus on Bitcoin’s fundamental proposition as a scarce digital asset. They see halvings as milestones that reinforce its role as a store of value, holding positions for years or decades.

) Common Misconceptions

1. Guaranteed Appreciation: Although prices have historically risen post-halving, there is no guarantee this pattern will continue.

2. Immediate Effect: The full impact may take months or years to materialize, not hours or days.

3. Isolated Event: Halvings are part of Bitcoin’s ongoing monetary policy, not binary, disconnected events.

4. Reduction in Holdings: Halving only affects the rate of new issuance, not the value of bitcoins already in circulation.

Current Bitcoin Situation ###Data as of December 2025###

Current Price: $88,330 24-hour Change: +0.32% Weekly Change: -2.11% Monthly Change: +1.97% Yearly Change: -9.67%

These metrics reflect ongoing market volatility, reminding that multiple variables—beyond halving—influence price movements.

What Happens When Emission Runs Out?

When the 21 million bitcoins are fully mined, block rewards will cease. Miners will rely entirely on transaction fees as compensation, raising questions about long-term sustainability.

However, if Bitcoin’s usage and value continue to grow, fees could provide sufficient incentives. Additionally, future technological innovations—such as the Lightning Network and second-layer solutions—may reshape how fees are distributed to miners.

Final Reflection

Bitcoin halving encapsulates the elegance of the economic model conceptualized by Satoshi Nakamoto: a predictable, transparent, and verifiable monetary policy directly embedded in the protocol. This mechanism has transformed Bitcoin from a digital experiment into a globally recognized asset class.

For participants in the crypto market, understanding halvings provides critical context about Bitcoin’s fundamental value proposition. As the next reduction cycle approaches in 2028, recognizing both the potential and risks—based on rigorous analysis rather than speculation—will be crucial for effectively navigating market cycles.