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What's next for the price of Bitcoin as it officially completes its halving in 2024?

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  • Bitcoin's fourth event halved miner rewards from 6.25 to 3.125 BTC per block.
  • Industry experts are divided on the long-term impact, with projections suggesting potential new highs of $250,000.
  • The reduction in block rewards aims to reduce the supply of bitcoins, which currently stands at 19.6 million.

On Friday evening, the Bitcoin network implemented its fourth halving event, cutting incentives for miners in half. Specifically, as of April 18, miners earned 6.25 BTC tokens, equivalent to roughly $400,000, for validating a block of transactions. After yesterday's halving, miners are now earning 3.125 BTC.

This event occurs approximately every four years, as dictated by the Bitcoin code. The goal is to moderate the issuance of bitcoins and promote their scarcity. Industry experts are divided on the implications of this year's halving for bitcoin's long-term value.

JPMorgan expects a potential downside for Bitcoin after the halving, while Deutsche Bank indicates limited expectations for price escalation. However, the real consequences may be felt in the coming months. Significantly, the price of Bitcoin has historically secured several new all-time highs after the halving event.

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For example, after the first halving cycle, Bitcoin saw a staggering 9,300% increase in value, rising from around $12.5 to $1,163 a year later. A similar trend was also repeated in the second and third cycles as shown in the figure below.

Popular projections from industry experts suggest that Bitcoin could reach a new high of $250,000 in this fourth cycle. However, with BTC up around 700% in the third cycle, a repeat of this history suggests a potential $500,000 per Bitcoin.

Notably, the 3.125 BTC mining reward is now equal to approximately $200,000 as of Friday evening. The mining reward was initially 50 bitcoins, although it had a cash value of about $625.

Reducing block rewards reduces the supply of Bitcoin by slowing the creation of new coins. As set out in the bitcoin code, the total number of bitcoins in circulation is set at a maximum of 21 million, with approximately 19.6 million already in circulation today.

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