How the Bitcoin Halving Will Impact Crypto

Feb 22, 2024

As the 2024 Bitcoin halving approaches (April 2024), the crypto community is abuzz, eagerly waiting to see what the sudden reduction in the BTC reward rate will yield. 

The halving will slash mining rewards in half, a move anticipated to affect supply, demand, and potentially the price of bitcoin (BTC).

Historically, each halving has been a forerunner to huge changes within the industry. Accelerated adoption rates, groundbreaking innovations, and all-time high BTC prices have followed all previous halvings.

With the 12-18 month post-halving period seeing the largest growth each time, the anticipation for the 2024 halving is understandably high. 

So, what will the 2024 halving look like exactly? Will it be different from previous halvings? And how can you take advantage of the halving hype?

What is the Bitcoin Halving?

The Bitcoin halving is an event that occurs approximately every four years, or after every 210,000 Bitcoin blocks are mined. 

This process halves the rewards given to Bitcoin miners for validating transactions, slowing the rate of new bitcoin creation.

When Bitcoin first launched, the reward for mining a block was 50 BTC. 

There have been three halvings since, and the reward rate now sits at 6.25 BTC. The next halving, set for April 2024, will see the reward drop to 3.125 BTC.

This four-year halving cycle is set to continue until approximately the year 2140, with the rewards set to drop to just micro-fractions of a BTC within a couple of decades.

The halving mechanism is central to Bitcoin's design, mirroring the extraction of a finite resource like gold.  It's a deliberate move to introduce scarcity to the digital asset. 

History of the Bitcoin Halvings

2012 Bitcoin Halving

The first Bitcoin halving occurred on November 28, 2012, when the block reward was reduced from 50 to 25 BTC. 

This halving came just three years after Bitcoin's launch, marking the first test of its deflationary design in real-world conditions. 

Following the halving, Bitcoin experienced a surge in value, rising from around $12 to over $200 within a year.

This surge in value caught the eye of certain investors and prompted some niche developers to explore the potential of blockchain for the first time.

Multiple new (or “alternative”) blockchain networks started popping up, some of which were viewed as legitimate competitors to Bitcoin itself at the time.

Litecoin, XRP, and Dogecoin were all born out of this initial post-halving boom period.

The first post-halving bull run peaked on December 13th, 2013, with the BTC price hitting $1000 for the first time.

Source: CoinMarketCap

2016 Bitcoin Halving

The second halving, on July 9, 2016, saw the block reward decrease to 12.5 BTC. 

This event was closely watched, as many were curious to see if it would replicate the impact of the 2012 halving. 

As with the previous run, developers were inspired to explore the new possibilities blockchain had to offer — specifically on the newest Bitcoin competitor, Ethereum.

Initial Coin Offerings (ICOs) became the new fad. Anyone could now raise funds for their project by launching their own utility token on the Ethereum blockchain.

Some of the biggest ICOs of this period included Cardano ($62M raised), Filecoin ($257M raised), and Polkadot ($248M raised).

Bitcoin's price eventually peaked at nearly $20,000 at the end of 2017, further cementing the influence of halvings on its market value​​​​.

Google trends show Bitcoin interest peaked in the period after the 2016 halving.

2020 Bitcoin Halving

May 11, 2020, marked the third halving, reducing the current mining reward of 6.25 BTC per block. 

This halving occurred amidst a maturing crypto market and growing institutional interest, setting the stage for another price rally. 

However, this halving also occurred during the height of the COVID-19 pandemic, which many speculated would cancel out its positive effects.

Although the market did flinch initially in the face of COVID, nothing could stop the power of the halving.

This time, the post-halving run was led by innovations in Decentralized Finance (DeFi) and speculation around NFT art. 

By the end of the run in November 2021, Bitcoin's value reached nearly $69,000, showcasing the ongoing relevance of halvings.

The 2020 post-halving bull run saw a similar price pattern to the 2013-14 market. 

The Impact of the 2024 Bitcoin Halving

The 2024 halving will reduce the mining reward to 3.125 BTC.

Despite the historical data showing its positive effects, its impact this time around is still a subject of speculation. 

Each post-halving boom has been driven by a unique narrative that pushed the market to new heights. 

Without the accompanying narrative, the post-halving boom may not be as effective… in theory.

In reality, the crypto space has been in a silent boom phase since the last halving. An influx of innovation and new technology has advanced the industry like never before.

Advancements in Blockchain Gaming (GameFi), Artificial Intelligence (AI), and the tokenization of real-world assets (RWA) are just some of the sectors that could take the industry by storm post-halving.

Furthermore, with Bitcoin ETFs now live, the halving might create greater institutional interest in Bitcoin. BTC could become more attractive as a scarce asset, drawing larger investments from institutional players.

These factors will also drive the public's growing awareness, and the fear of missing out (FOMO) from retail investors could create a snowball effect, leading to increased demand for Bitcoin.

The 2024 Bitcoin halving is set to be a critical landmark for the crypto industry. 

Unlike previous halving events, institutional access to BTC and forward leaps in innovation could see an influx of legitimate users as well as the expected speculative investors for the first time.

Through Bake’s “The Great Eight” Smart Bundle, you can optimize your exposure to the assets set to lead narratives driving the post-halving bull run. 

An optimized allocation of the top GameFi projects, AI tokens, Layer 2 platforms, and more is available to purchase in just a couple of clicks. 

Invest in the next big thing with Bake’s Smart Bundles.

DISCLAIMER: Please note that the information on this blog and in any articles posted on this blog is for general information only and should not be relied upon as financial advice. Cake Pte. Ltd., Bake, UAB, and its affiliates (the “Cake Group”) are not licensed financial advisers. You may wish to approach your own independent financial advisor before making any decision to buy, sell or hold any product and/or digital assets mentioned in this blog.

Any views, opinions, references, assertions of fact and/or other statements are not necessarily the views held by the Cake Group. The Cake Group disclaims any liability whatsoever that may arise out of or in connection with such statements. Always do your own research before investing in any financial assets and consult a qualified financial advisor if necessary.


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