What halving is and what it means for your investment

Last Updated: 7. Februar 2024By

Yesterday, I wrote to you about the decline in Bitcoin prices following the market’s anticipation of the introduction of Bitcoin ETFs in the US.

While some investors may have been caught off guard, I recommended looking ahead.

In my opinion, the upcoming fourth Bitcoin halving, which is expected to take place in mid/end of April, is particularly important. The Bitcoin halving is one of the most significant events in the world of cryptocurrencies.

In this article, I will explain what the halving is, what it means for you as an investor, and what we can learn from previous halvings.

What is Halving and What Does it Mean for Your Investment?

Halving is a form of automatic artificial scarcity, in which the incentives for (cost-intensive) „mining“ of new Bitcoins are reduced (halved) at regular intervals.

If the price does not double in the same period, this means less revenue for the miners. This can lead to mining no longer being profitable for some.

As a result, the supply of new Bitcoins continues to decrease. This is in contrast to currencies like the Euro or US Dollar, where the constant expansion of the money supply leads to a continuous decrease in value.

The scarcity of new Bitcoins creates a slightly deflationary effect. This lowers the inflation rate of Bitcoin from around 1.7% p.a. to only 0.8% p.a., which is generally good for the stability of a currency.

When all Bitcoins are mined by around the year 2140, there will be a fixed supply of just under 21 million Bitcoins.

Halving is an inbuilt feature to prevent inflation, and investors can see its impact on the price development.

Halving is not only unique to Bitcoin: similar scarcity mechanisms exist in some other third and fourth-tier cryptocurrencies. It also exists in the second-largest cryptocurrency on the market, Ethereum.

Unlike Bitcoin, Ethereum does not have a predetermined halving time. Instead, Ethereum has the so-called ‚Ice Age‘ phenomenon, where the block time increases, indirectly reducing the rewards for miners. But let’s get back to the Bitcoin halving.

Previous Halvings Led to Significant Value Growth

Previous Bitcoin halving events have generally had a positive impact on the Bitcoin price. The upcoming halving in 2024 could also have a significant influence on the entire cryptocurrency market.

For example, after the 2012 halving, the price of 1 Bitcoin increased by +8,024% within 12 months. A year after the 2016 halving, the Bitcoin price increased by +287%. Even a year after the 2020 halving, the Bitcoin price rose by +534%.

In my stock market service „Voigts Global Profits,“ we were able to multiply our capital by more than 10 times using leverage instruments in the last halving!

Due to the positive past and the impending scarcity in April, many investors are now expecting a significant price increase. The recent decline in Bitcoin prices following the ETF approval could therefore turn out to be a bargain opportunity.

However, nothing is „safe“ on the stock market. There are too many factors, including external and unpredictable ones. As investors, we can only speculate. With enough knowledge and a good system, however, there are high profit opportunities for you, which you should also take advantage of.

In my stock market service „Voigts Global Profits,“ you will find not only my regular technical analysis of Bitcoin & Co., but also the best cryptocurrency instruments that you can trade normally on any stock exchange. Without a wallet, without prior knowledge, with your regular stock portfolio.

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