Bitcoin halving: Is Bitcoin a Millionaire Maker?

Bitcoin halving: What it is and how the price of the world’s biggest crypto may be affected

The cryptocurrency Bitcoin is undergoing a technical change in late April, and some traders speculate that the change may help boost the price of the world's largest cryptocurrency.
Known as a "halving," this change reduces the rate at which Bitcoin miners can produce new coins.
Here's how the Bitcoin halving may impact the crypto's price and what investors should know.

What is a Bitcoin halving?
Bitcoin is a cryptocurrency that exists only digitally, and it's managed by a series of networked computers that track, manage and issue the currency.
This network verifies transactions using the currency, ensuring the integrity of the system and ownership of the coins.
New bitcoins are issued when high- powered computers called Bitcoin miners process complex math problems.

The reward for solving these math problems is predetermined, set into the computer code governing Bitcoin when it was established. As part of that reward schedule, the reward rate is cut in half every four years – called a halving – with events in 2012, 2016, 2020, 2024 and so on.

So miners receive fewer and fewer bitcoins over time as they solve these complex problems, until Bitcoin’s total issuance of 21 million coins is reached, in approximately the year 2140. So far about 19.7 million bitcoins have been issued, according to CoinMarketCap.com.

At the start of 2024, Bitcoin miners received 6.25 bitcoins for correctly solving a problem and adding a block to the blockchain. Following the halving in April 2024, they earn just 3.125 coins. This change slashes the payout to successful miners from about $400,000 to about $200,000.

This series of halvings will continue in the future, further reducing the issuance of new coins.

What does a Bitcoin halving mean for traders?
The slowing issuance of new bitcoins through a halving highlights the fundamentally deflationary nature of the cryptocurrency. With a fixed issuance of just 21 million coins – including millions that are presumed lost forever – Bitcoin is deflationary. That is, because supply is relatively fixed in the short term, its price in dollars is apt to go up as long as demand for the crypto rises.

Short-term traders looking to play the halving may find it especially tricky, because the excitement about the event may have already been factored into the price – even months ago.

Markets are forward-looking, often anticipating events well before they emerge into the financial press. For example, in the months leading up to the official approval of Bitcoin ETFs in January, Bitcoin soared. And the halving is the definition of an event that has been long known.

Bottom line
Those looking to trade the Bitcoin halving may find themselves on the wrong side of a move because the market may have already priced in any changes in sentiment well ahead of time. Those who believe that Bitcoin remains an attractive long-term investment, however, should watch ongoing flows into the asset while understanding the significant risks of owning it.