Bitcoin halving is a 12 months away. That would point out one other bull run

The bitcoin halving is an event that occurs roughly every four years in which miner rewards are halved, effectively limiting the supply of tokens.

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Bitcoin is almost a year away from a major technical event – ​​which could be the trigger for a sustained surge in the cryptocurrency’s value.

In April or May 2024, Bitcoin is expected to go through its next so-called “halving”, although the exact date is not yet known.

Bitcoin has risen in anticipation of the halving in recent weeks as a potential Federal Reserve rate cut grapples with the prospect of sluggish growth and tightening credit conditions amid problems in the banking sector.

According to data from CoinGecko, one bitcoin was worth around $30,000 as of Wednesday morning. The world’s largest cryptocurrency is up more than 80% year-to-date.

Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that at a time of bank failures and economic uncertainty, bitcoin’s jump above $30,000 indicates the cyclical “bottom” is forming for bitcoin.

“This typically happens about a year ahead of Bitcoin’s halving, which is next scheduled for around April 2024,” Ayyar told CNBC via email.

What is the Bitcoin Halving?

Bitcoin halvings occur roughly every four years, or whenever another 210,000 “blocks” are added to the blockchain. The event cuts rewards for bitcoin miners — volunteers who operate special devices to validate transactions on the network and mint new tokens — by 50%. The aim is to reduce the number of new bitcoin units brought onto the market.

Currently, bitcoin miners receive 6.25 bitcoin for each block they successfully mine. That means their computer had the right processing power to solve the cryptographic puzzles that secure the Bitcoin network and prevent it from being compromised by malicious actors.

Once the next bitcoin halving occurs, this reward will be reduced to 3.125 bitcoin.

Cryptocurrency supporters say this may help push the price higher by increasing bitcoin scarcity.

The maximum number of bitcoins that will ever circulate is capped at 21 million. This is ensured by the halving mechanism, eventually reducing bitcoin mining rewards to $0.

Prior to the last halving, which took place on May 11, 2020, the bitcoin price rose by 19% in the previous 12 months, from $7,191.36 to $8,568.88, according to figures from CCData.

During the previous halving – which took place on July 9, 2016 – Bitcoin surged 142% compared to the 12 months prior, moving from $269.14 to $651.83.

During the first-ever halving on November 28, 2012, Bitcoin’s price surged 384% from $2.55 to $12.35, figures from CCData show.

“Analysis of historical Bitcoin halving patterns shows that investors often accumulate Bitcoin leading up to the halving event, although the exact timing and magnitude of post-halving returns may vary,” CryptoCompare analyst Jamie Sly told CNBC.

“The accumulation period from the market bottom after the breakout to the halving date has historically lasted at least 500 days.”

Sly added: “That would mean if we assumed the market bottom for this cycle was in November of last year (when Bitcoin hit a yearly low of $15,760) then we are only 142 days into the current cycle. This would correlate with the next expected bitcoin halving date which is another 378 days in the future.”

Bitcoin gains after halving

Bitcoin price tends to keep rising in the months following the halving.

After the May 11, 2020 halving, the cryptocurrency surged 688.31% in the following 546 days, hitting a record high of $67,549.14 on November 8, 2021, according to CCData.

At the previous halving event, which took place on July 9, 2016, Bitcoin surged 2,824% by mid-December 2017 to an all-time high of $19,065.71 at the time.

Bitcoin had a hot 2022 marked by the collapse of large companies and projects, from stablecoin TerraUSD to crypto exchange FTX.

Rising inflation led to higher interest rates in the US and other major economies, which in turn caused investors to flee Bitcoin and other risky assets.

This has caused the prices of several top digital currencies to plummet from their all-time highs.

Despite its recent surge to $30,000, Bitcoin is still down more than 50% from the November 2021 highs.