What is Bitcoin "Halving?"

April 26, 2024

Bitcoin tends to pop in and out of the headlines. Few financial topics in recent memory have sparked as much imagination and criticism. Unsurprisingly, the latest development with Bitcoin has provoked much discussion and curiosity: the “halving” of Bitcoin.

What is the “halving?” In short, it's a scheduled reduction in the number of new Bitcoin entering circulation. This occurs every four years as part of an ongoing effort to keep the total supply of Bitcoin below 21 million total coins. Essentially, it reduces the reward for verified transactions over time to gradually smaller amounts. By doing this, Bitcoin will never surpass that 21 million coin cap, which may help maintain the cryptocurrency’s value as a hedge against inflation.1

However, with the approval of new Bitcoin financial products tied to crypto, investors are watching to see if the halving will influence prices.1

Bitcoin may be suitable for certain aggressive investors as part of a well-diversified portfolio. However, it may not work for investors with low risk tolerance or shorter time horizons. Cryptocurrency lacks regulatory and investor protection structures, which is important to remember if you consider adding Bitcoin to your investable assets.

Over the last decade and a half, Bitcoin and other cryptocurrencies have sparked curiosity and fascination like few things before. Like many, I share that interest and like to keep an eye on what’s happening in that world.

The information presented is for educational and informational purposes only and is not intended as a recommendation or specific advice. Bitcoin cryptocurrency-related products can be volatile, are highly speculative and involve significant risks including: liquidity, pricing, regulatory, cybersecurity risk, and loss of principal. A cryptocurrency fund may trade at a significant premium to Net Asset Value (NAV). Bitcoins are not legal tender and are not government backed. Bitcoins are non-traditional investments, resulting in a different tax treatment than currency.  Federal, state or foreign governments may restrict the use and exchange of cryptocurrency. The use and exchange of cryptocurrency may also be restricted or halted permanently as regulatory developments continue, and regulations are subject to change at any time. Cryptocurrency exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers, malware, or bankruptcy. 

 

1. NYTimes.com, April 18, 2024. “Countdown Is On for the Bitcoin ‘Halving’”