On April 20, 2024, a halving occurred on the Bitcoin network at block 840,000. The miners' reward for a mined block was reduced from 6.25 BTC to 3.125 BTC.
According to Google Trends, this programmed event caused increased attention to the first cryptocurrency from the community, and many experts presented their assessments of the impact of halving on miners and the industry as a whole.
In this material, we have collected key indicators and market expectations related to the halving of the award.
Everything goes according to plan
Like the previous three halvings, this one went off without any technical glitches.. Miners continue to mine blocks and process user transactions at a set rate.
Block mining speed. Data: Glassnode .
The total number of transactions remained virtually unchanged, as did the total amount of transfers, which indicates a lack of excitement or sharp interest on the part of cryptocurrency owners.
Total transaction volume. Data: Glassnode . Number of transactions. Data: Glassnode .
The median commission size shows minimal growth compared to pre-halving levels.
Median commission. Data: Glassnode .
The network hashrate remains stable, despite the sharp increase in the cost of Bitcoin mining and, consequently, the break-even level of miners’ equipment.
Bitcoin network hashrate. Data: Glassnode .
The complexity of the network remains unchanged for now, but it is adjusted programmatically, approximately every 2 weeks, in response to an increase or decrease in hashrate. The last difficulty calibration took place on April 11, 2024, so we will only be able to feel the impact of the halving on this indicator on April 25.
Impact of halving on market performance
At the time of writing, key Bitcoin market metrics remain stable and virtually unchanged from pre-halving performance, confirming the forecast of former Binance cryptocurrency exchange CEO Changpeng Zhao.
“There will be a lot of news and anticipation in the months leading up to this event. The day after the halving, the price of Bitcoin will not double. And people will ask why this didn’t happen,” said CZ.
The value decreased only slightly, causing corresponding changes in the market capitalization of the first cryptocurrency.
Bitcoin rate. Data: TradingView . Bitcoin capitalization. Data: TradingView .
The Bitcoin Dominance Index also did not have time to react significantly to the halving and remains in the range of 55.50%.
Bitcoin dominance indicator. Data: TradingView .
As for the derivatives market, we are seeing a slight decrease in the overall open interest for Bitcoin. The structure of positions is slightly dominated by long contracts, which may indicate cautious optimism among market participants.
VI indicator for Bitcoin futures on the market. Source : CoinGlass Long-short ratio. Source : CoinGlass
Note that based on the open interest of Bitcoin, JP Morgan analysts concluded that the asset is overbought and predict the possibility of a collapse in value after halving.
It is important to understand that less than a day has passed since the halving, so miners, as well as other major players, have not yet had time to react to the new network conditions, which affects market indicators. Changes in the dominance index or the ratio of long and short positions take longer.
Hard times for miners
The key participants in the Bitcoin ecosystem who are directly affected by the halving are miners. Their actions and impact on market value are driven by a sharp decline in block rewards that leaves many farms below profitability levels.
Bloomberg believes that because of this, the losses of miners within a year after the reduction in the reward could reach $10 billion, and the CEO of the mining company Core Sceintific, Adam Sullivan, announced his readiness to buy equipment from companies that will not be able to cover their operating costs due to this event. Subsequently, this is compensated by the increase in the price of Bitcoin, however, in order to survive the “hard times”, fiat liquidity is needed.
10x Research analyst Markus Thielen believes that miners will be forced to sell most of their reserves in the next few months. The total amount of these sales could reach $5 billion and put pressure on both the price of Bitcoin and altcoins.
However, Grayscale Investments is confident that the drawdown will be short-term, since there is evidence that in this cycle, miners began to prepare in advance for a reduction in rewards. In addition, the decrease in profitability is partially offset by a drop in hashrate.
Another equally important aspect is cost optimization to increase mining profitability. It is carried out through the use of more modern and efficient equipment (ASIC), as well as the search for more affordable energy sources.
In practice, this is expressed in the growth of hashprice — the cost of servicing one terahash (TH/s) of computing power. Especially noticeable during periods of halving and a sharp drop in the value of Bitcoin.
Bitcoin hash price index. Data: HASHRATE INDEX.
Given this effect, Fineqia International analysts note that the halving could encourage miners to switch to renewable and sustainable energy sources due to their availability.
What's next?
According to most market participants, the halving is always followed by a Bitcoin rally, although its timing and intensity may vary. This expectation is based on the experience of previous cycles, in each of which, according to CoinGecko, Bitcoin grew by an average of 3230%.
Robert Kiyosaki said he will buy another 10 BTC on the eve of the halving, since, according to his forecasts, the price of the asset could reach $100,000 by September 2024. Analysts at investment firm Benchmark said they expect $150,000 per coin by the end of 2025, and Pantera Capital seems to agree.
However, short-term expectations are not so optimistic. Back in February, JP Morgan announced a possible collapse in the value of Bitcoin to $42,000 immediately after the halving.. Fred Thiel, the CEO of Marathon Digital, is less radical, but also not enthusiastic — in his opinion, the positive impact of the reduction in remuneration was already taken into account in the price of Bitcoin and appeared even before the reduction in remuneration. Coinbase experts expressed a similar position, pointing out that the ATH update before the halving indicates the depletion of momentum.
These positions were actually summarized in his post by popular blockchain influencer Ash Crypto.
It is noteworthy that at the same time, Wintermute employees believe that the rapid growth of STX, RUNE and ORDI tokens associated with the Bitcoin ecosystem is possible.
In addition, a new factor influencing the price has appeared — spot Bitcoin ETFs. Santiment expected that exchange-traded funds would be able to maintain capital flows ahead of the halving, but analysts find it difficult to predict how investors will behave after this event.
We note that in five of the last seven trading days before the reduction, Bitcoin ETF rewards showed outflows of funds.
Capital inflow/outflow in the spot Bitcoin ETF sector. Source: SoSo Value .
This discrepancy with forecasts is likely caused by a sharp collapse in the value of Bitcoin due to news about the escalation of the confrontation between Israel and Iran in the Middle East. And it seems that the role of geopolitical events in this cycle will also increase.
You can learn more about the impact of the reward reduction on market performance and Bitcoin miners in our detailed material on halving.