Q “Hi Timon, I’m surprised Bitcoin has passed the $70K. I believe this is due to the Bitcoin halving coming up. Could you explain what the Bitcoin halving is and how it’s worked since Bitcoin’s inception?”

A. Certainly, Bitcoin halvings are pivotal events for the crypto-currency.

Bitcoin halving is an event that takes place around every four years (or every 210,000 blocks mined).

This is where the reward for mining new blocks is halved. Which means, Bitcoin miners receive 50% fewer Bitcoins when they verify their transactions.

This mechanism is built into Bitcoin’s code to control inflation, reduce the supply of new Bitcoins, and ensure that the total supply of Bitcoin caps at 21 million.

And this means, it will slow down the rate at which new bitcoins are created.

Let’s look at the timeline of the past Bitcoin halvings and the expected future halving in 2024.

1. First Halving – November 28, 2012:

The reward for mining a block was halved from 50 bitcoins to 25 bitcoins.

This was the first halving event which marked the beginning of Bitcoin’s journey into mainstream awareness.

2. Second Halving – July 9, 2016:

The block reward was further reduced from 25 bitcoins to 12.5 bitcoins.

When this halving took place, we saw Bitcoin’s price rocket in 2017 from $912 up to $1,679.

3. Third Halving – May 11, 2020:

The most recent halving reduced the block reward from 12.5 bitcoins to 6.25 bitcoins.

And this was the start of Bitcoin’s major volatility (period) . We saw the price move from $7,092 up to $68,482.

From 2022 up until 2024, the price moved in a large range. Until February, where the price shot above all time highs heading to $70,000 in March.

Every time there is a halving event, Bitcoin rallies to unprecedented highs. And this time, it might even shoot to above $100,000.

4. Fourth Halving – Expected in April 2024:

The next halving is anticipated to occur this year in 2024.

We will see the block reward will decrease from 6.25 bitcoins to 3.125 bitcoins.

“Q. Timon you often talk about how Smart Money is buying this and selling that. And I have to be honest. I have no idea who you are talking about?”

A. Smart Money are the big market movers.

These are usually institutional investors such as:

• Hedge funds
• Private equity firms
• Investment banks
• Big banks
• Market makers
• Asset management companies
• Mutual Fund companies

Their contract sizes and volumes are large enough to shake and move the markets.