Bitcoin halving mechanism and 2024 market new dynamics analysis

Bitcoin Halving Basic Concept

Bitcoin Halving refers to the event where the block reward for miners is halved after every 210,000 blocks are mined. This mechanism was designed by Satoshi Nakamoto with the aim of limiting the supply of Bitcoin to 21 million coins. The fourth Halving is set to occur in April 2024, reducing the reward from 6.25 BTC to 3.125 BTC, with the next one expected around 2028.

The impact of Halving on supply and price

Halving reduces the supply of newly added Bitcoin; if demand remains unchanged or even increases, it will provide support for the price. Miners face increased cost pressures, and if they cannot pass on these costs, some hash power may withdraw, further tightening liquidity.

Historical Price Trends

After the last three Halvings, Bitcoin typically experiences a cycle of “upward - adjustment - accelerated rise.” New highs were reached after the Halvings in 2012, 2016, and 2020. Analysis suggests that if this pattern continues, the price of Bitcoin could break through the range of $120,000 to $150,000 by the end of 2025, and may challenge the $200,000 mark.

Performance After the 2024 Halving

Unlike in history, after the 2024 Halving, Bitcoin’s performance has been relatively weak, with market prices experiencing a slight decline at one point. Miners need to sell more coins to maintain profitability due to the price drop. Liquidity and macroeconomic factors have a significant impact on prices, leading to considerable short-term volatility.

Investor strategies

It is recommended to adopt a dollar-cost averaging strategy to reduce volatility risk, focus on on-chain data such as changes in hash rate and wallet data, and closely monitor macro policies and ETF approval progress. Reasonable asset allocation and setting profit-taking and stop-loss levels can help to respond steadily to market fluctuations.