Benzinga - Leading cryptocurrency Bitcoin (CRYPTO: BTC) has had an eventful 2024 year with the approval of Bitcoin ETFs in January.
Another exciting catalyst for Bitcoin is the latest Bitcoin halving, which happened last night.
Here’s a look at what this means and how investors have profited.
What Happened: A Bitcoin halving occurs every 210,000 blocks, which happens roughly every four years. The block rewards get halved as soon as the 210,000th block is mined.
A Bitcoin halving is a method put in place for the cryptocurrency to help enforce synthetic price inflation until all Bitcoin has been mined and released. Theoretically, the Bitcoin halvings that occur should make it more expensive to create new Bitcoins and make the cryptocurrency more valuable.
Bitcoin operates differently from fiat currencies like the U.S. dollar in this respect. While fiat currencies typically lose purchasing power over time, Bitcoin tends to increase in value rather than depreciate.
The first Bitcoin halving happened on Nov. 28, 2012, with the block reward reduced from 50 Bitcoin to 25 Bitcoin.
The second Bitcoin halving happened on July 9, 2016, with the block reward reduced from 25 Bitcoin to 12.5 Bitcoin.
The third Bitcoin halving happened on May 11, 2020, with the block reward reduced from 12.5 Bitcoin to 6.25 Bitcoin.
A Bitcoin halving can make the cryptocurrency increasingly volatile but often leads to surges in the price. Bitcoin went from $12 to $1,217 in one year after the first halving.
Here’s a look back at how much the cryptocurrency was up prior to last night’s halving.
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Investing $1,000 in Bitcoin: Before last night, the last halving date for Bitcoin was on May 11, 2020. Bitcoin traded between $8,374.32 and $9,033.47 that day.
A $1,000 investment could have purchased 0.1107 BTC based on the highest price on that date.
The $1,000 investment would be worth $7,077.75 today, based on a price of $63,936.35 for Bitcoin at the time of writing. This represents a gain of 607.8% since the Bitcoin halving three-and-a-half years ago.
For comparison, the SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500 stock market index, is up 169.3% over the same time period, based on a closing price of $292.50 on May 11, 2020.
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This article was previously published by Benzinga and has been updated.
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