Let’s start with Bitcoin! It’s the first and most famous digital currency; hence, everything related to it is of great interest to the industry. One of the most important events in the Bitcoin network is the halving. Bitcoin is subjected to halving events every four years, as it’s an essential step in maintaining its scarcity because it slashes the amount of coins miners receive to confirm new blocks. Each halving is a big deal not only in the Bitcoin network, but for the entire sector because it affects the evolution of all the other digital currencies. 

Why should this matter to you when you’re looking for an Ethereum price prediction? Because any fluctuation in Bitcoin’s price will trigger changes in Ethereum’s evolution. Understanding how halving events impact the entire market is crucial so you can make informed choices. 

This article will take you on a journey to help you understand halvings’ importance and potential. Ready? Buckle up!

Let’s understand what Bitcoin halving is

What everyone should know about Bitcoin halving is that it’s an event scheduled in the cryptocurrency’s protocol to cut down the reward amount for mining new blocks by 50%. It happens approximately every four years, as the mechanism built into Bitcoin’s core requires and ensures that the creation of new coins slows down as Bitcoin gets closer to its maximum supply. At this point, most investors see Bitcoin as a store of value (gold), so mimicking its production rate and maintaining its scarcity characteristic is essential. 

Bitcoin’s creator, Satoshi Nakamoto, introduced the halving mechanism to control inflation. As mentioned earlier, Bitcoin has a limited supply; there can ever be a maximum of 21 million bitcoins, so the network must be exposed to control mechanisms to ensure the mining process is prolonged as much as necessary. Halving also ensures that Bitcoin remains a deflationary asset that maintains its value over time. This way, Bitcoin differs from traditional currencies, which are printed without limits and suffer the effects of inflation. 

Thus, the halving is more than a technical event for the blockchain; it impacts investors’ behavior and the market’s trends. The months preceding the event anticipate a lower supply and trigger extensive speculative activity in the sector. The period following the event usually comes with surging prices that provide investors with the opportunity to make a profit. Fully grasping the importance of this cyclical event is paramount for anyone involved in the industry. 

Bitcoin halvings impact the entire crypto market

At first glance, there is no direct connection between Bitcoin’s halving and the evolution of altcoins. However, everyone is aware that Bitcoin and other cryptocurrencies are correlated, and thus, such an important event in the Bitcoin network will definitely leave a mark on all the others. 

Bitcoin has become a valuable instrument for investors, and all events related to its evolution will capture the public’s attention. The last halvings triggered price spikes and gained the attention of both crypto enthusiasts and outsiders. Even the mainstream media covered the events and kept an eye on the asset’s price, months past the event. Curious minds also watched how altcoins moved because even if Bitcoin has maintained its dominance in the sector, altcoins also experienced value surges. 

All rallies in Bitcoin were followed by gains in alternative currencies, especially in Ethereum. Usually, when investors make a profit from adding Bitcoin to their portfolios, they also venture into altcoins in search of extra returns. This dynamic was observable over the years, especially after halving events and during bull periods. However, this halving event is special because it took place in a time of increasing institutionalization of digital currencies so that the post-halving consequences might differ. Crypto specialists believe that the long-term perception of alternative currencies won’t change due to the halving event, considering the level of institutional investors interested in the market at the moment. The industry is hyped that BTC will rally in the following months, but at the moment, the regulators control the narrative, and the institutional holders have less power. 

What happened after the last halving events?

It’s exciting to watch what happens in the sector after such important events as the halving. So, let’s examine how Ethereum reacted to previous halvings. 

2006 Halving – We’ll start with the second halving because Ethereum wasn’t created when the first occurred in 2012. When the second halving took place, Ethereum was released for less than a year and was sold as around $12. ETH didn’t register an immediate price surge after the halving, but it peaked after 18 months when the entire market entered a bull period. 

2020 Halving – This time, Ethereum was already one of the most well-known cryptocurrencies and was trading between $175 and $250. The market witnessed a higher correlation between BTC and ETH prices this time when they both reached new record highs. Since then, the price correlation between the two has stabilized, and they have been moving in sync, regardless of the state of the market. 

Factors to consider after the 2024 halving

Even if the previous halving events influenced Ethereum’s evolution, it’s essential to note that the crypto market is highly volatile, and we cannot rely on historical data to try to predict what the future holds. No one can say what will happen after the last halving because it took place in unique conditions. All market cycles are different, and a series of factors are at play. 

Here are the factors investors should keep in mind when analyzing the 2024 halving:

-Macroeconomics – cryptocurrencies’ prices corrected in April when the US Federal Reserve cut the interest rates. Additionally, inflation will impact how all digital currencies perform in the following months. 

-Geopolitical events – the wars in Europe and the Middle East will definitely have a positive impact on the demand for cryptocurrencies because they function as hedges against such instances. 

-ETH ETF – By 23 May, we should know if the US will accept ETH ETF applications. 

-Regulations – regulations will influence cryptocurrency prices, as they directly impact the areas where they can be used.