Unprecedented Trends Surround Fourth Bitcoin Halving: Growth, Decentralization, and Increasing Adoption
Summary:
The fourth Bitcoin halving, unlike previous ones, saw the introduction of institutional investment, leading to a pre-halving price surge. Since 2020, the number of crypto users has grown by around 400 million, with Bitcoin users specifically rising by 208%. Moreover, the 2024 Bitcoin halving is the first with spot Bitcoin exchange-traded funds (ETFs) active in the U.S, indicating increased Bitcoin demand. Bitcoin's network has also become more decentralized and secure, with mining spreading worldwide and the blockchain becoming more resistant to attacks.
The fourth Bitcoin halving has transpired, differing from preceding ones because of the introduction of institutional investment for the first time. Historically, Bitcoin halvings tend to lead to a significant increase in Bitcoin's price sometime after the event. The cryptocurrency world eagerly awaits the unfolding of the 2024 halving, already heralding some noticeable changes. From the time of the last halving in May 2020, the number of cryptocurrency users has surged by 400%.
Simultaneously, while the rate of Bitcoin generation has dropped since the first halving, appetite for it hasn’t let up. Going by different metrics, an estimated 400 million users have joined the crypto space since the previous halving. In 2020, there were about 100 million cryptocurrency users globally, as posited by Cambridge Centre for Alternative Finance (CCAF). By the closing bell of 2023, crypto exchange Crypto.com estimates that this figure has swelled to roughly 580 million individuals.
While Bitcoin holds the title for the world's highest valued and earliest cryptocurrency, it's user base pales compared to the crypto industry as a whole. As Technopedia data suggests, Bitcoin was owned by approximately 2.7% of the global population in 2024, equating to around 219 million people. This figure is a whopping 208% increase from the 71 million Bitcoin users four years prior, based on Crypto.com’s calculations.
The pre-halving rally in 2024 has broken away from the usual trend of price surges happening post-halving. Before other halving events, Bitcoin's price usually experienced a breakout after, not before the event. This cycle, however, the Bitcoin price surge to new all-time highs happened right before the halving, reaching a record $73,600 on March 13, 2024, baffling analysts.
Miners also seem better off this halving, as the unprecedented pre-halving price surge has helped them better manage mining expenses. Moreover, since the third halving in 2020, there has been a notable uptick in Bitcoin's power consumption, reaching 99 Terawatt hours (Twh) by April 18, 2024. However, renewable sources are increasingly powering these operations with their contribution rising from 39% in September 2020 to 54.5% by January 2024.
The 2024 halving is also unique due to the adoption of spot Bitcoin ETFs in the US for the first time. Since their launch in January 2024, these financial instruments have witnessed phenomenal success, signaling increased demand for Bitcoin.
Since their inception, these ETF offerings have grown their Bitcoin holdings by at least 220,000 BTC, around $14 billion in today's value. In particular, BlackRock's Bitcoin ETF saw inflows exploded from an initial 2,621 BTC to 273,140 BTC by April 18.
In terms of network security and decentralization, Bitcoin has made noticeable strides. The digital asset, formerly dominated by Chinese miners, has seen its mining operations spread across the globe. As of February 2024, the US was in the lead with a 40% share, followed by China and Russia with 15% and 12% respectively.
Finally, Bitcoin's blockchain has grown five times stronger against potential attacks since the previous halving. Consequently, anyone targeting the network would need five times more computing power, electricity, and mining hardware, hence improving the overall security.
Published At
4/20/2024 11:00:00 AM
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