Bitcoin halving is one of the most important events in crypto. Recap the different elements that were covered throughout the Bitcoin halving course, refreshing your understanding of the halving, the four-year cycle and bitcoin trading.
What is the Bitcoin halving?
The Bitcoin halving is an event that takes place approximately every four years. Bitcoin miners compete to solve complex mathematical problems and validate blocks on the Bitcoin blockchain. The first person to do so is rewarded with newly issued bitcoin, increasing the cryptoasset’s circulating supply.
The Bitcoin halving marks the point at which 210,000 blocks are successfully mined and the number of bitcoin received by miners as a reward for mining is cut in half.
| Halving Year | Previous Rewards | New Rewards |
|---|---|---|
| November 2012 | 50 BTC | 25 BTC |
| July 2016 | 25 BTC | 12.5 BTC |
| May 2020 | 12.5 BTC | 6.25 BTC |
| April 2024 | 6.25 BTC | 3.125 BTC |
How does the four-year cycle work?
Since the Bitcoin halving occurs approximately once every four years, the time between halving events is often referred to as the “Bitcoin four-year cycle.”
Historically, the price of Bitcoin has surged following a halving event. This is due to changes in supply and demand as the incoming supply of new bitcoins is cut in half. In addition, now that Bitcoin has demonstrated patterns across the four-year cycle, demand for the cryptoasset typically increases around the time of the halving.
Lower supply + higher demand = higher price
Stages of the four-year cycle
Below are some of the stages of the four-year cycle, as demonstrated by previous Bitcoin halving events. Remember, there is no guarantee that future halving events will follow the same patterns:
- Pre-halving: Media and retail interest in bitcoin increases, often leading to a pre-emptive bitcoin price increase.
- Post-halving: The supply of new bitcoins is halved and the price of bitcoin typically starts to increase significantly.
- Parabolic peak: Buying pressure builds as the price of bitcoin increases, thus pushing the price higher. Money flows into other cryptoassets as interest in the space grows.
- Bear market: Investors take profits and the price of bitcoin falls dramatically, often marking the start of an extended crypto bear market.
- Accumulation phase: As the price consolidates at lower levels, some investors choose to buy bitcoin in anticipation of the next halving event.
What factors impact trading decisions?
There are several factors that might impact the way in which traders and investors react to the Bitcoin halving:
- Greed and fear
- Self-fulfilling prophecies
- Investor sentiment
- External influences
Trading the halving on eToro
It is possible to trade bitcoin and other cryptoassets on eToro, alongside other asset classes. The eToro Money crypto wallet is a great option for storing cryptoassets, and it offers the same security features — and shares the same account details — as a regular eToro account.
It is also possible to map the price of bitcoin on eToro as the broker provides all users with access to TradingView and its numerous charting tools.
Remember, although the period surrounding the Bitcoin halving can be filled with positive news stories and potentially significant price increases, crypto is an incredibly volatile and inherently risky asset class. Be sure to have a well-thought- out strategy that factors in your personal risk appetite, investment time horizon and capital.
Now that you have completed the Bitcoin halving course, either revisit the materials, test your knowledge or start investing!
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This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments.
This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Not all of the financial instruments and services referred to are offered by eToro and any references to past performance of a financial instrument, index, or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.