Bitcoin Halving Unfolding, Industry Reshaping Countdown

CoinW Exchange
5 min readMar 22, 2024

Introduction:

Bitcoin is set to undergo its fourth halving in April 2024, further reducing the supply of new coins and expectedly undergoing price appreciation.

The halving mechanism, designed by Satoshi Nakamoto, aims to maintain the stability of the Bitcoin economic model. Following each halving, mining rewards are reduced by 50%, resulting in miners relying more on transaction fees rather than these rewards. However, Bitcoin’s utility has diversified significantly during the past few years, as a result of the proliferation of smart contracts and expanded use cases by its layer 2 solutions.

Regarding its impacts, Bitcoin halving could affect miners, exchanges, and the entire crypto market. Anticipated outcomes include heightened market attention and price increases. CoinW Academy foresees exchanges preparing for increased volatility and opportunities arising from the halving.

In April 2024, Bitcoin will undergo its fourth halving. In previous halving cycles, Bitcoin has experienced temporary price surges. During this halving cycle, Bitcoin briefly stabilized at the $65,000 support level. With further declines in Bitcoin mining rewards, transaction fees from smart contracts, ordinals, and BTC L2 solutions will increasingly influence Bitcoin’s trajectory.

First, let’s delve into how halving works. The halving mechanism operates on a transparent, predetermined schedule, independent of any central authority’s control. Furthermore, each halving reduces the rate at which new coins are created. With reduced supply and increasing demand, Bitcoin’s price shows significant upward momentum.

Halving Ensures Long-term Stability, but Utility is the Future

Bitcoin’s halving mechanism, central to Satoshi Nakamoto’s design, aims to stimulate demand by reducing supply, thereby maintaining the stability of Bitcoin’s value and economic model. According to Nakamoto, Bitcoin’s economic model is sustainable, with the halving mechanism ensuring a stable revenue.

This rule was established when Nakamoto released the Bitcoin source code. While some bugs have been addressed since then, the fundamental rules remain unchanged. The halving mechanism is created as a deflationary measure to increase prices by reducing supply, thereby encouraging mining while ensuring the sustainable development of the Bitcoin blockchain.

Generally speaking, a miner’s income consists of transaction fees and mining rewards. However, Bitcoin’s sole reliance on mining mechanisms to sustain miners’ income has diminished, with transaction fees from Bitcoin ecosystem development becoming a driving force for miners’ continued investment.

Looking ahead, by the end of this cycle, a total of 18.375 million bitcoins will have been mined, accounting for 87.5% of the 21 million total issuance. Subsequently, miner’s revenue will increasingly depend on transaction fees.

Transaction fees refer to the cost incurred by miners to verify block transactions. It consists of a small part of mining rewards. However, this may change after the halving, with smart contracts and ordinals generating significant Bitcoin mainnet transactions while mining rewards gradually approach zero. At that point, transaction fees must cover miners’ costs to maintain Bitcoin’s security.

Therefore, ordinals, inscriptions, and BTC L2 solutions must address the issue of miner income to ensure the normal operation of the Bitcoin network. Gas fee income from ordinals has surged, with ordinals generating revenues exceeding 6,000 bitcoins, valued at over $400 million as of mid-March. Moreover, as Bitcoin implementing halving at block height 840,000, Runes Protocol has a high probability of turning Bitcoin into an FT (fungible token) asset launch platform.

On the other hand, BTC L2 solutions are thriving, with Layer 2 fervor driving price growth for underlying assets like Bitcoin. Similar to the Ethereum L2 frenzy, more L2 solutions supporting Bitcoin as gas fees will expand Bitcoin’s utility and empower its value.

The Surge Explained- Bitcoin Spot ETFs

Bitcoin halving is expected to impact various sectors and projects. Foremost among them are miners and mining hardware manufacturers. As the Bitcoin halving date approaches, more miners and capital will enter the PoW mining sector.

More importantly, the overall cryptocurrency market may be affected. Besides Bitcoin’s price growth, with the approval of the Bitcoin spot ETF in January, approximately $30 billion has flowed into the ETF market. As a result, demand for Bitcoin from the traditional market is expected to grow. With miners and exchanges holding approximately 3 million bitcoins, the market’s supply-demand will continue to push Bitcoin prices upwards.

Since early 2020, the difference between available and illiquid bitcoins, i.e., circulating and non-circulating supply, has been declining, marking a significant change from previous cycles. However, the emergence of Bitcoin spot ETFs may alter the supply-demand situation, offsetting post-halving miner sell-offs and further leaving a positive impact on prices. Lastly, as the halving is getting close, Bitcoin’s price surpassed its historic high in 2021.

Rune Gathering Momentum

The “Rune” protocol plans to go live on the mainnet during the next Bitcoin halving. Bitcoin halving has triggered market volatility and increased investor interest by bringing more attention and discussion, reaching a peak of FOMO sentiment, and this will lead to the increasing visibility and participation of the “Rune” protocol.

The launch of the “Rune” protocol may have various effects on project development. First and foremost, with the protocol’s launch, more developers and users may be attracted, driving ecosystem development and expansion.

If the “Rune” protocol can effectively leverage the market heat brought about by Bitcoin halving by providing valuable services or solutions, it may gain a competitive advantage in the market, accelerating its growth and development.

Conclusion

The halving event may increase price volatility in the short term, causing fluctuations in both CEXs and DEXs. To better ensure seamless trading, CoinW has actively conducted internal testing. As a six-year-old exchange, CoinW has accompanied tens of millions of users through three halvings, and the fourth will come as expected, enjoying BTC Summer together!

Following the approval of the Bitcoin spot ETF in January, funds from the traditional financial market entered. And in the past two months, BTC has surpassed silver, becoming the world’s eighth-largest asset. Shortly after, the BTC price reached an ATH, breaking through the $73,000 mark!

To commemorate this historic moment, CoinW has launched the “30,000 USDT Prize Pool, Boosting BTC to ATH” event, where participants can predict the price and trade BTC to share the prize pool. Join Now!

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