Your 2024 Bitcoin Halving Update

The fourth Bitcoin halving has taken place, bringing with it a unique set of circumstances that distinguish it from previous halvings. One of the most notable differences is the significant role institutional investment plays this time around, with traditional finance entities contributing to the dynamics of the event.

Historically, Bitcoin halvings have been associated with a price spike following the event. The question remains whether this pattern will continue with the 2024 halving, but it’s clear that several factors set this halving apart.

Firstly, the number of new Bitcoin entering the market has decreased with each halving, yet demand continues to grow. Since the last halving in May 2020, the global crypto user base has increased by about 400 million people, indicating a surge in interest and adoption.

In 2020, the total number of crypto users was estimated at 100 million, according to the Cambridge Centre for Alternative Finance. By the end of 2023, Crypto.com estimated that figure had grown to 580 million, suggesting a significant expansion in the crypto ecosystem.

Despite Bitcoin’s status as the leading cryptocurrency by market capitalization, it appears to have fewer users than the broader crypto ecosystem. Technopedia estimates that 2.7% of the global population, or approximately 219 million people, own Bitcoin in 2024, an increase from 71 million users four years ago.

One of the most remarkable changes in the 2024 halving cycle is that Bitcoin reached an all-time high of $73,600 before the halving, something not seen in previous cycles. Typically, Bitcoin’s price would break out after the halving, with new record highs occurring about a year later. This unique pre-halving price surge has potentially benefited Bitcoin miners, giving them more control over their operating costs.

Chris Kuiper, Director of Research at Fidelity Digital Assets, noted that miners are in a better position this cycle, with lower debt levels and improved cost management, including energy expenses. He attributed this improvement to the pre-halving price rally, which had not been observed in previous cycles.

Bitcoin’s energy consumption for mining has nearly doubled since the last halving, increasing from 50 Terawatt hours (Twh) to 99 Twh by April 18, 2024. However, renewable energy sources now power a significant portion of Bitcoin mining, with 54.5% of energy coming from renewables in January 2024, up from 39% in 2020.

Another key development in the 2024 Bitcoin halving is the introduction of Bitcoin exchange-traded funds (ETFs) in the United States. These ETFs, which began trading in January 2024, have attracted significant institutional interest. Since their debut, the ten spot Bitcoin ETFs have accumulated at least 220,000 BTC, worth around $14 billion. BlackRock’s spot Bitcoin ETF has seen the most substantial growth, with holdings increasing from 2,621 BTC to 273,140 BTC by April 18.

Despite these developments, Bitcoin has also seen an improvement in network security and decentralization. Bitcoin’s mining industry is now more globally distributed, with the United States accounting for 40% of the global hash rate, followed by China and Russia at 15% and 12%, respectively. This diversification has enhanced Bitcoin’s resistance to attacks, requiring five times more computing power and associated resources to compromise the network compared to the previous halving.

These various factors indicate that the 2024 Bitcoin halving could play a pivotal role in shaping the future of the cryptocurrency market, with a combination of institutional investment, network security, and geographical decentralization contributing to its unique character.