Bitcoin’s price remains stable despite 2023 halving event

Bitcoin (BTC), the world’s most well-known cryptocurrency, has recently undergone its fourth halving event since its creation.

Halvings, which occur roughly every four years, are designed to reduce the number of new Bitcoin entering the market by cutting the rewards earned by Bitcoin miners in half. This mechanism is built into Bitcoin’s code to cap the total supply at 21 million by the year 2140.

The latest halving, which took place on April 23, 2023, has reduced the daily creation of Bitcoin from 900 to just 450. Previous halvings occurred in 2012, 2016, and 2020. Despite the significant event, Bitcoin’s price remained stable at $63,747 (£51,531), as analysts believe the anticipated halving had already been priced in by the market.

Investors are hopeful that the halving will eventually lead to significant gains, as has been the case with previous halvings. For example, after the May 2020 halving, when the price was around $8,600, Bitcoin surged to over $56,000 within a year. However, Andrew O’Neill, a crypto expert at S&P Global, remains cautious about making price predictions based on previous halvings, stating that the halving is just one of many factors that can drive the price of Bitcoin.

Bitcoin hit a new high of $73,803 (£59,661) in March 2023, following a 175% increase over the previous 12 months. The cryptocurrency also gained legitimacy in January when Exchange-Traded Funds (ETFs) holding Bitcoin were allowed to be traded on the US stock exchange.

Despite these milestones, the mainstream financial industry still views Bitcoin as a high-risk investment prone to unpredictable and dramatic price swings. Bank of England governor Andrew Bailey has warned that cryptocurrencies have “no intrinsic value” and that investors should be prepared to lose all their money. He also stated that crypto was “pretty inefficient” and not yet taking off as a core financial service.

With more than 19.5 million Bitcoin already mined, only 1.5 million remain to be mined over the next 116 years. The halving mechanism, which occurs every 210,000 “blocks,” ensures a steady and controlled release of new Bitcoin into the market until the maximum supply is reached.

The development follows crypto miners stockpiling near-record amounts of Bitcoin, hoping the token will rise in value and offset a drop in new supply that will cut the rewards for verifying transactions in half. Fees for transactions on the network have also significantly decreased following the halving.

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