A new Bitcoin halving has occurred, marking the fourth one to date. However, this particular halving stands out from the rest due to the significant involvement of institutional investors. Historically, Bitcoin halvings have been associated with a subsequent increase in BTC price, which typically happens after some time has passed since the halving. While it remains to be seen if the fourth halving will follow the same pattern, there are already noticeable differences compared to previous halvings.
One notable change is the increase in the crypto user base since the 2020 halving. Although the speed of new Bitcoin generation has decreased since the first halving, the demand for cryptocurrencies has continued to grow. Various sources estimate that the global crypto user base has expanded by at least 400 million users since the previous halving in May 2020. In 2020, there were approximately 100 million crypto owners worldwide, but by the end of 2023, that number had surged to around 580 million people.
Surprisingly, even though Bitcoin is the largest cryptocurrency by market capitalization and the oldest, it has fewer users than the entire crypto ecosystem combined. As of 2024, it is estimated that around 2.7% of the global population owns Bitcoin, which translates to approximately 219 million people. This figure represents a significant increase of around 208% compared to the 71 million Bitcoin users four years ago.
However, it is important to note that estimating the exact number of users is challenging due to the inability to differentiate between long-term holders and lost BTC through on-chain transaction analysis.
Another major difference in the fourth halving is the unprecedented price growth before the event. In previous cycles, Bitcoin’s price typically experienced breakouts after the halving, with new all-time highs occurring approximately one year later. For example, in the 2020 halving cycle, Bitcoin did not surpass the previous all-time high of $20,000 until 10 months after the halving. However, this time around, Bitcoin reached new all-time highs right before the halving, setting a record of $73,600 on March 13, 2024.
This unique price breakout has caught the attention of multiple analysts, who agree that it is unlike anything seen before. The mining industry has also benefited from the price appreciation before the halving, as miners now have better control over their costs, including electricity expenses. This improvement in miners’ financial situation is in contrast to previous halvings.
Additionally, the energy consumption of Bitcoin mining has increased significantly since the third halving in May 2020. However, there has also been a notable increase in the use of renewable energy sources to power Bitcoin mining, with renewables accounting for 54.5% of BTC mining consumption as of January 2024.
Furthermore, the fourth halving is the first to feature the availability of spot Bitcoin exchange-traded funds (ETFs) in the United States. These ETFs have seen remarkable success and have attracted significant inflows from institutional investors since their debut in January 2024.
Overall, Bitcoin has made significant strides in terms of network security and decentralization. The geographic distribution of Bitcoin mining has become more balanced, with China no longer dominating the mining hash rate. The United States, China, and Russia are now the three largest Bitcoin mining countries.
In conclusion, the fourth Bitcoin halving has introduced several unique aspects, including increased institutional involvement, a growing crypto user base, a pre-halving price rally, improved miner conditions, the availability of spot Bitcoin ETFs, and enhanced network security and decentralization. These developments highlight the continued evolution and maturation of the Bitcoin ecosystem.