The bitcoin halving aftermath for investors, miners, and the crypto market

The much-anticipated halving event for bitcoin took place on Friday, dropping the issuance rate of new bitcoin to roughly 3.125 every ten minutes. After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners were cut in half.

Just days after bitcoin’s halving, the cryptocurrency was quoted at $65,125 levels on Monday (April 22). The maximum supply for Bitcoin remains capped at  $21 million, while current circulating supply stood at 19.69 million, underlying the limited scope for fresh bitcoins.

Bitcoin has gained as much as 54% so far this calendar year, and has zoomed 136% since in the last 52 weeks. The present market capitalisation of Bitcoin stands at $1.28 trillion.

What happened at the halving?

After Friday’s halving, the rate of new bitcoin created roughly every 10 minutes is 3.125. These halving events take place after every 210,000 blocks are validated or roughly every four years. These halvings were baked into the network’s design when it was originally launched in January 2009, as a way to reduce the rate at which bitcoins are created.

After the halving, the block reward or subsidy associated with validating each new block of transactions on the bitcoin network is cut in half. The block subsidy is the newly-created bitcoin that is included in the block as a reward to the associated miner. So in effect, the block subsidy for successful miners is now 3.125 bitcoin.

What will happen next?

Despite expectations that the halving would stimulate the bull market, market analysts, including those from JPMorgan Chase & Co. and Deutsche Bank AG, suggested that the event was already factored into the market.

“While bitcoin’s price remained relatively stable post-halving, transaction fees on the network surged, signalling increased activity,” noted Kok Kee Chong, CEO of AsiaNext, a Singapore-based digital-asset exchange.

Each halving diminishes the dilutive impact of mining, with the upcoming cycle expected to generate only 3.3% of new bitcoin supply, a stark contrast to previous cycles.

However, bullish sentiments towards bitcoin may face headwinds from macroeconomic factors such as Federal Reserve signals and geopolitical tensions. Edward Chin, co-founder of Parataxis Capital, predicts market choppiness in the near term, with ETF fund flows remaining a key price driver.

While the halving’s primary impact is anticipated to affect bitcoin mining companies rather than the cryptocurrency’s price directly, analysts suggest a consolidation within the sector, with publicly listed miners poised to gain market share due to improved access to funding.

As bitcoin’s blockchain has successfully weathered past halvings without disruption, attention now turns to the next halving in 2028, where the reward will be further reduced. With 64 expected halvings before reaching the 21 million cap, miners face a future reliant on transaction fees as a primary revenue source.