Will the price of bitcoin rise before the halving?

Many crypto experts and traders argue that before the halving of Bitcoin (BTC) expected in 2024 at the 840,000 block, one should not expect an increase in the value of the price of the cryptocurrency, while according to other experts the bull market has already started.

What is the Bitcoin halving?

The Bitcoin halving is a predefined event that occurs approximately every 4 years and which halves the Bitcoin reward that miners receive for confirming transactions on the Bitcoin blockchain.

Initially, when Bitcoin was launched in 2009, miners received a reward of 50 Bitcoins for every confirmed block. In 2012, the halving reduced this reward to 25 Bitcoins, then in 2016 to 12.5 Bitcoins and the last halving occurred in May 2020, reducing the reward to 6.25 Bitcoins.

This Bitcoin reward reduction mechanism is designed to limit the total supply of Bitcoin which can be mined from the Bitcoin protocol at 21 million units, creating a limited supply and potentially increasing the value of Bitcoin over time.

The halving therefore represents a significant event for the Bitcoin community and can have an impact on the price and volatility of Bitcoin.

What influences the price of Bitcoin

Certainly there are various factors that can influence the increase in the price of BTC before the halving:

First of all, users’ expectations must be taken into account, which can cause significant fluctuations in its price.

As Gracy Chen, managing director of crypto exchange Bitget explains, “During the previous halvings of 2012 and 2016, BTC’s user base was limited and a small number of individuals could influence its price. However, as more individuals and institutions become familiar with BTC, the halving event will likely follow the rules of mature financial markets, where speculation can drive the price increase in the year before the halving ”

For this reason, when the halving approaches or completes, the price of BTC may fall and some users may sell their BTC. However, the price could continue to rise after the halving, even taking into account the global economic cycle and Bitcoin’s own cycle.

However, the global economic cycle must also be taken into account.

In 2020, due to the outbreak, the Federal Reserve started to ease its monetary policy and, combined with concepts such as the third BTC halving and the DeFi summer, the BTC price reached $69,000.

However, excessive currency issuance and monetary policy easing were the main drivers behind the BTC price surge. Indeed, external financial environments and market cycles have a large impact on the price of Bitcoin, especially as more and more institutions, funds and individuals are investing in it. In fact, continuous price increases could be triggered after the Fed has set the new interest rate limits.

“As more institutions join and resonate with other factors, such as the Federal Reserve’s expected monetary policy easing in 2024, there may be an upward trend before the halving,” Bitget told us.

BTC or the cryptocurrency market cycle itself

BTC hit its all-time high of $69,000 in November 2021 and has gone through a year-and-a-half easing period.

“In summary, the increase in the price of BTC before the halving depends on several factors. In order of priority, the order would be: global business cycle > BTC or the cryptocurrency market cycle itself > investor expectations,” explains Gracy Chen.

Currently, the fourth halving combines with factors such as the increase in the amount of investments in BTC by global financial institutions, the reduction of interest rates expected in 2024, the imminent halving of Bitcoin and the achievement of a point of minimum in November 2022. For this reason, the BTC trend before the fourth halving should be stronger.