The last Bitcoin halving took place on May 11, 2025, and the next halving will likely occur in 2025. What is the halving, how does it affect the price, and what does it mean for miners and the cryptocurrency’s long-term prospects?
Before we explore the various aspects of Bitcoin halving it is important to first explore the ways in which the Bitcoin network operates on the whole.
What is Bitcoin and what is it used for?
Bitcoin, often described as a cryptocurrency, a virtual currency, or a digital currency, is a type of money that is completely virtual, and as such was the first of its kind in the cryptocurrency domain.
In simplified terms, Bitcoin basically functions as an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.
The physical Bitcoins that one sees in photos are a novelty. They would be worthless without the private codes printed inside them.
Each Bitcoin is essentially a computer file that is stored in a ‘digital wallet’ app on a smartphone or computer.
People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain, which we will describe in more detail later.
This blockchain makes it possible to trace the history of Bitcoins in order to prevent users from spending coins they do not own, making copies or undoing transactions.
There are three main ways that people use and receive Bitcoins:
- You can buy Bitcoins using ‘real’ money.
- You can sell products and have people pay you with Bitcoins.
- Bitcoins can be digitally generated using a computer
In order for the Bitcoin system to work, people can make their computer-processed transactions available to everybody.
These computers are set up in order to solve incredibly complex equations. Occasionally they are rewarded with a Bitcoin for the owner to keep.
In a process called mining, some people set up powerful computers just to try and get Bitcoins, and we will also explain how this process works in more detail later.
In essence, Bitcoins are valuable because people are willing to exchange them for real goods and services, and even cash.
Added to this, many users are particularly attracted to the fact that Bitcoin is not controlled by any government or banks.
People can also spend their Bitcoins with relative anonymity. Although all transactions are recorded, nobody would know which ‘account number’ was yours unless you told them.
The number of companies accepting bitcoin payments has increased over the last few years. Microsoft and travel website Expedia both take bitcoin, and Icelandic singer Bjork is also accepting bitcoin payments for her latest album.
Retailers in Japan can now accept bitcoin payments thanks to a new law passed recently, and small businesses can accept bitcoin payments through simple plugins that add to WordPress websites.
Added to this, the currency has also found favor in countries experiencing political turmoil like Zimbabwe and Venezuela.
Bitcoin and the blockchain
Originally designed for the crypto-currency Bitcoin, the blockchain architecture was driven by a radical rejection of (government-guaranteed) money and bank-controlled payments.
The developer of Bitcoin, Satoshi Nakamoto, envisioned people spending money without friction, intermediaries, regulation or the need to know or trust other parties.
Bitcoin and its blockchain are basically a collection of computers, or nodes, around the world that all have Bitcoin’s code downloaded on them.
Blockchain is an algorithm and distributed data structure for managing electronic cash without a central administrator among people who know nothing about one another.
Blockchain is a special instance of Distributed Ledger Technologies (DLTs), almost all of which have emerged as a result of the use of Bitcoin.
Blockchain monitors and verifies Bitcoin transactions by calling upon a decentralized network of volunteer-run nodes to, in effect, vote on the order in which transactions occur. The network’s algorithm ensures that each transaction is unique.
The Bitcoin blockchain’s functionality and security result from this network of thousands of nodes agreeing on the order of transactions.
The scattered structure of the network ensures transactions and balances are recorded without bias and are resistant to attack by even a relatively large number of bad actors.
To this end, the record of transactions and balances remains secure as long as a simple majority of nodes remain independent. For this reason, the integrity of the blockchain requires a great many participants.
One of the Bitcoin blockchain’s most innovative aspects is how it incentivizes nodes to participate in the intensive consensus-building process by randomly rewarding one node with a fixed bounty every time a new block is settled and committed to the chain.
This accumulation of Bitcoin in exchange for participation is called “mining” and is how new currency is added to the total floating system.
In this way, Bitcoin is entirely transparent and no one can make a transaction without everyone seeing it happen. Even those who do not participate in the network as a node or miner can view these transactions taking place live by looking at block explorers.
Bitcoin mining
In short, Bitcoin mining is the process whereby individuals use their computers to participate in Bitcoin’s blockchain network as a transaction processor.
Bitcoin uses a system called Proof of Work, which essentially means that miners must prove they have put forth effort in processing transactions to be rewarded. This effort includes the time and energy it takes to run the computer hardware and solve complex equations.
Faster computers with certain types of hardware produce larger rewards and some companies have designed computer chips specifically built for mining. These computers are tasked with processing Bitcoin transactions and they are rewarded for doing so.
The term is not meant to be understood literally but is rather used as a reference to the way precious metals are sourced.
Bitcoin miners solve mathematical problems and confirm the legitimacy of a transaction. They then add these transactions to the end of a block and create chains of these blocks of transactions, forming the blockchain.
When a block is filled up with transactions, the miners that processed and confirmed the transactions within the block are rewarded with Bitcoin.
Transactions of greater monetary value require more confirmations to ensure security. This process is called mining because the work done to get new Bitcoin out of the code is the digital equivalent of the physical work done to pull gold out of the earth.
How to trade Bitcoin
While the forex market is already incredibly dynamic, cryptocurrencies like bitcoin have added a compelling new dimension to currency trading.
In recent years, many forex brokers have begun to accept bitcoins for currency trading, with some accepting a variety of other cryptocurrencies as well.
Most forex trading is conducted in a decentralized fashion through over-the-counter markets.
However, the very fact that the forex market is decentralized and that bitcoin is considered to be a decentralized digital currency does not mean that the two are equivalent.
When you trade bitcoin, you never interact directly with an exchange. Instead, you trade on a broker’s buy and sell prices, which are sourced from a number of exchanges on your behalf.
Therefore, in order to take a position on bitcoin’s price, all you need is a live trading account with a suitable broker that supports Bitcoin trading.
As a working example of forex trading when using Bitcoin, the first step is to open a forex trading account with a broker who accepts bitcoins.
Following this, you transfer two bitcoins from your digital wallet to the forex digital wallet in order to create a currency pair, and from there you speculate on the price fluctuations between your pair and that of another cryptocurrency trader.
The benefits of forex trading with Bitcoin
Decentralized valuations
A huge benefit of trading forex with bitcoin is that it is not tied to a central bank. Digital currencies are free from central geopolitical influence and from macroeconomic issues like country-specific inflation or interest rates.
High leverage
These days, the majority of forex brokers that support Bitcoin provide leverage for Bitcoin trades.
Experienced traders can use this to their benefit. However, such high leverage should also be approached with due caution as it also enhances your potential for making significant losses.
Low minimum deposit requirement
Some Bitcoin-supporting online forex brokers allow traders to start with a minimum deposit of as little as $25.
Added to this, several forex trading brokers have even offered promotions like a matching deposit amount. Traders should check that the broker is legitimate and appropriately regulated.
Competitive trading costs
Many brokers that support cryptocurrency trading also provide extremely competitive trading conditions for their clients, particularly due to the increase in competition amongst brokers.
Effective security provided
While Bitcoin networks have been susceptible to cyber-attacks in the past, many brokers have put adequate security measures in place.
Added to this, you do not need to reveal your bank account or credit card details to make a bitcoin transaction. This is a big advantage in terms of cost and financial security.
No limitations on global boundaries
Bitcoin transactions have no global boundaries. A trader based in South Africa can trade forex through a broker based in the United Kingdom.
Regulatory challenges may remain a concern, but if both traders and brokers are willing to transact, there are no geographical boundaries.
The risks of forex trading with Bitcoin
Differing exchange rates
Because Bitcoin trades on multiple exchanges and exchange rates vary, it is important that traders first have a sound understanding of which bitcoin exchange rates the forex broker will be offering.
The risk from the US Dollar rate
When receiving bitcoin deposits from clients, nearly all brokers instantly sell the bitcoins and hold the amount in U.S. dollars.
Even if a trader does not take a forex trade position immediately after the deposit, he or she is still exposed to the bitcoin-to-U.S. dollar rate risk from deposit to withdrawal.
The risks associated with volatility in the forex market
As with all currency pairs, Bitcoin prices have also exhibited a historically high volatility.
While this volatility creates greater opportunities for making a profit, without sound regulations, unregulated brokers may use this volatility to their advantage and to the detriment of the trader.
That is why it is imperative, as with all currency exchange trading, to sign up with a reputable and well-regulated broker which provides due recourse for the trader.
Inherent security risks
Due to their digital nature, deposited bitcoins are prone to theft by hacking, even from a broker’s digital wallet. To reduce exposure to this risk, it is once again important to sign up with a broker that uses SSL encryption, and cold storage and is well-regulated.
The risks associated with using high leverage
As with all currency trading, using high leverage without an adequate understanding of the mechanism may expose inexperienced traders to unnecessary risk, so that high leverage should always be used in combination with an effective risk management strategy.
The mixing of asset classes
Cryptocurrency is a different asset class altogether and has its own valuation mechanism.
Trading forex with bitcoins essentially introduces a new intermediate currency that can impact profit and loss in new ways. Any money that is not locked down in a trader’s base currency is a risk.
Bitcoin halving: everything a trader should know
Now that we have explored the finer details of Bitcoin trading, on the whole, we can look at the various aspects of Bitcoin halving in order to allow you to prepare your trading strategy for this event.
In May 2025, the number of bitcoins entering circulation every 10 minutes (known as block rewards) dropped by half, to 6.25 from 12.5.
This was a milestone that was easy to anticipate because it happens every four years and as such has happened twice before 2025.
But the reason so many Bitcoin traders are so focused on the next upcoming halving is due to the allure of possible high profits.
As such, the amount of supply entering the system will suddenly shrink, but the demand will, in theory, stay the same, possibly driving up the cryptocurrency’s price.
In response, the event has resulted in complex discussions about bitcoin price predictions and how the market will respond.
On the whole, though, the theory is based on the fact that there will be less bitcoin available to buy if miners have less to sell.
The block reward is an important component of Bitcoin and one which ensures the security of this decentralized system.
As the rewards dwindle to zero in the decades ahead, it could potentially destabilize the economic incentives underlying bitcoin’s security.
As such the periodic decline in Bitcoin’s minting rate could have a deeper significance than any near-term price movements for the functioning of the currency.
New bitcoins enter circulation as block rewards, produced by “miners” who use expensive electronic equipment to earn or “mine” them.
Every 210,000 blocks, or about every four years, the total number of bitcoin that miners can potentially win is halved.
In 2009, the system started at 50 coins mined every 10 minutes. Two halvings later, 12.5 bitcoins are currently being dispensed every 10 minutes. This process will end with a total of 21 million coins, which is expected to occur in the year 2140.
Why is Bitcoin structured in this finite way?
Bitcoin was created by a mysterious entity that operated under the pseudonym, Satoshi Nakamoto, which all but disappeared approximately a year after introducing the ground-breaking Bitcoin software to the world.
As such, they are no longer available to explain why exactly they chose this specific formula for adding new bitcoin into circulation, though a few theories can be formulated from the subsequent use of Bitcoin, as well as from information previously released by its creator.
As such, Nakamoto summarized the various ways their chosen monetary policy, which is essentially the schedule by which miners receive block rewards, could subsequently evolve.
To this end, they speculated on the circumstances under which this schedule could lead to deflation (when a currency’s purchasing power increases) or inflation (when the prices of goods and services are purchasable with a currency increase).
However, it is worth noting that at any point during bitcoin’s creation and subsequent release, Nakamoto, or anyone else for that matter, could not have known how many people would end up using this new cryptocurrency.
Nevertheless, it is worthwhile examining how conventional monetary policy affects currency prices and comparing this to the way that the Bitcoin architecture causes it to behave.
In most state-issued currencies a central bank, such as the U.S. Federal Reserve, has tools at its disposal that allows it to add or remove dollars from circulation.
If the economy is undergoing a recession, for example, the US Fed can increase circulation and encourage lending by purchasing securities from banks. Alternately, if the Fed wants to remove dollars from the economy, it can sell securities from its account.
Unlike the monetary policy of state-issued currencies, which evolve through political processes and human institutions, Bitcoin’s monetary policy is written into code that is shared across the network.
Changing this code would mean an immense output of coordination and agreement across the community of Bitcoin users.
But one of the most unique and intriguing aspects of Bitcoin is the very fact that Nakamoto programmed the block reward to decrease over time in the first place.
This is another way in which it differs from the norm for modern financial systems, where central banks control the money supply. In stark contrast to Bitcoin’s halving block reward, the supply of the dollar has roughly tripled since 2000.
As already noted, when this virtual currency was created, a limit of 21 million bitcoins was established to avoid inflationary behavior in the currency.
Therefore, the number of bitcoins is finite and nobody has complete and direct control over this virtual currency. It is a decentralized cryptocurrency.
Is estimated that in the year 2140 the last bitcoin will be issued. Then, only what is generated by the transaction itself will be obtained as a reward.
As such, the Bitcoin halving is best understood as a “penalty” that is put in place to guarantee a constant supply of bitcoins, counteracting the increase in processing power.
This penalty can be understood or likened to the advancement of technology that allows it to process a larger volume of data in less time. Because the issuance of bitcoins is fixed, this essentially makes it a deflationary currency.
It would seem then that the Bitcoin halving process was inbuilt in order to allow the currency to achieve its ultimate goal.
This was to create a revolutionary means of purchase that would liberate entire economies from their dependence on the banking system, making them truly decentralized.
The finite nature of bitcoins comes with a number of pros and cons for traders, which include the following:
Advantages
- The benefit of this currency decentralization is that bitcoins cannot be manipulated.
- Since infinite bitcoins cannot be generated, their value is not devalued and their price stabilizes. Unlike what happens with cash, in which central banks issue unlimited and devalue their value.
Disadvantages
- Bitcoin is volatile owing to its limited amount and its growing demand (more and more bitcoin transactions occur).
- For miners, the rewards will be insignificant. However, when the rewards for mining are very low, then the miners must live on commissions derived from confirming transactions.
How to prepare for the Bitcoin halving
In order to adequately prepare for the Bitcoin halving, there are a number of prevailing factors that traders need to keep in mind.
The point that new coins are created means the money supply rises by a projected amount, but this does not inevitably rise in inflation.
If the supply of money grows at the same rate that the number of people using it rises, the rates will remain constant. If it does not grow as fast as demand, there will be deflation and early holders of money will see its value rise.
Coins have to become originally allocated in one way or another, and a fixed rate looks like the most suitable formula.
Market rules dictate that supply and demand dominate the market. If demand remains the same, in theory an increase in supply lowers the price.
This means that if demand were to remain constant, the price would have to decrease more slowly after halving, which would see the supply growth of Bitcoin halved.
That said, fluctuating demand driven by emotions and the psychology of market players in the crypto market is by far the dominant market power. There is a generally held assumption that lowering the supply raises the price.
The so-called stock-to-flow ratio seems to leave no doubt that there is a connection between the halving of the block reward and the rising price, whereby the growth of cryptocurrencies can also be attributed to the growing awareness level.
This view is universally touted across all media outlets, which in turn naturally increases demand, as everyone wants to profit from the supposedly safe price increase. This very factor makes it a self-fulfilling prophecy.
An important indicator for the Bitcoin Halving will be the future price development of Litecoin. If the cryptocurrency of Halving continues to rise, it will fuel the Halving hype surrounding Bitcoin.
If that is not the case and Bitcoin is more likely to lose value, it could upset the collective belief in the stock-to-flow theory, which could significantly reduce the excitement around this factor.
This is due to the fact that if there is one single thing governing the crypto market, it is the emotion and the collective psychology of market participants, as opposed to various market theories.
During the last Halvening, the Bitcoin price didn’t really fluctuate. Although, some blame the 50 percent price rise (from $435 to $645) in the three months before the reward cut, with a small risk of establishing causation.
Apart from that, the network was moderately routinized. The overall hash rate (the total computing power running the Bitcoin network) stayed equivalent.
This suggests miners did not turn off their devices en masse with the information of earning fewer rewards, something many speculated would happen.
In other words, traders can adequately prepare for the halving by studying all the prevailing market theories and then comparing them to the prevailing market sentiment, which is by far the largest contributing factor.
In order to aid you in this process, there are a number of online countdown timers that will allow you to monitor both these market theories and the comparable market sentiment as the halving approaches.
As a final thought: what happens after all 21 million coins are mined?
“Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free”
- Satoshi Nakamoto
As already noted, there are only 21 million bitcoins that can be mined in total. Once miners have unlocked this amount of bitcoins, the supply will be exhausted.
However, there is one possibility that bitcoin’s protocol will be changed to allow for a larger supply, though this change would not be in keeping with Nakamoto’s fundamental vision.
So, what will happen when the global supply of bitcoin reaches its limit? Understandably, this is still the subject of ongoing and complex debate amongst cryptocurrency enthusiasts.
Currently, around 18.5 million bitcoin have been mined. This leaves less than three million that have yet to be introduced into circulation.
While the first 18.5 million bitcoin have been mined in the ten years since the initial launch of the bitcoin network, with only three million more coins to go, it might appear as if the Bitcoin network is in the final stages of bitcoin mining.
However, while it is true that the large majority of bitcoin has already been mined, the timeline is rather more complex.
The bitcoin mining process rewards miners with a chunk of bitcoin upon successful verification of a block, but this process is adaptable over time.
When bitcoin first launched, the reward was 50 bitcoin. In 2012, it halved to 25 bitcoin. In 2016, it halved again to 12.5 bitcoin. On May 11 2025, the reward halved again to 6.25 bitcoin.
The reward will continue to halve every four years until the final bitcoin has been mined.
What this means in real terms, is that the final bitcoin is unlikely to be mined until around the year 2140. However, it is possible the bitcoin network protocol will be changed between now and then, but that is only one possibility.
It appears so far that the group of Bitcoin users that will be most directly affected by the limit of the bitcoin supply will be the bitcoin miners themselves.
Many who wish to see changes made to the existing protocol claim that miners will be forced away from the block rewards they receive for their work once the bitcoin supply has reached 21 million in circulation.
Without the incentive provided by a prize of bitcoin at the end of a difficult and costly mining process, miners may not be driven to continue to support the network.
These detractors argue that this would have a disastrous effect on the ongoing success of Bitcoin.
As such, mining is not simply just a process by which new tokens are introduced into the cryptocurrency ecosystem.
It is first and foremost the way in which the decentralized blockchain is supported and maintained, particularly in the absence of a central bank or other single authority.
If the protocol were to cause miners to abandon their work, which it likely will after the limit has been reached, the network may either be forced to move toward centralization or else collapse entirely.
However, even when that moment comes, and the last bitcoin has been produced, miners will likely continue to actively and competitively participate and validate new transactions.
This is due to the fact that every bitcoin transaction has a small fee attached to it.
While these fees currently represent only a few hundred dollars per block, this value could increase to many thousands of dollars per block, especially as the number of transactions on the blockchain grows and as the price of a bitcoin rises.
Ultimately, the Bitcoin ecosystem in this scenario will function like a closed economy, where transaction fees are determined much in the same way as taxes.
It is important to remember in 2025 and going forward that this scenario is expected to take place more than a century from now.
In reality, as the year 2140 approaches, miners will likely spend years receiving rewards that are actually just tiny portions of the final bitcoin to be mined.
The dramatic decrease in reward size may mean that the mining process will entirely shift even before the 2140 deadline.
It is also important to keep in mind that the bitcoin network itself is likely to change significantly between now and then.
Considering how much has happened to bitcoin in just a decade, hard forks, new protocols, new methods of recording and processing transactions, and any number of other factors, may impact the mining process.
It is also true that, at some point before 2140, bitcoin may very well fall entirely out of favor. This could essentially render the entire process obsolete, as well as the question of what will happen when all bitcoin is mined.
The cryptocurrency ecosystem after the last Bitcoin runs out
As Nakamoto envisaged, nodes are responsible for maintaining the blockchain and verifying transactions.
The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU proof-of-worker than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments.
He could also use it to generate new coins. If the system works, he ought to find it more profitable to play by the rules, such rules that favor him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.
There will be transaction fees, so nodes will have an incentive to receive and include all the transactions they can. Nodes will eventually be compensated by transaction fees alone when the total coins created hit the pre-determined ceiling.
At the point of limitation, the total circulation will be 21,000,000 coins. It will be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.
When the bitcoin runs out, the system can support transaction fees if needed. It’s based on open market competition, and there will probably always be nodes willing to process transactions for free.
In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes.
Bitcoins have no dividend or potential future dividend, therefore they are not like a stock, but will likely be treated as a commodity.
Conclusion
Bitcoin, the first and leading cryptocurrency in terms of trading volume and market capitalization, went through its third “halving” on May 11, 2025.
This major adjustment to how cryptocurrency operates has only happened twice before and happens every four years.
Bitcoin halvings are significant events for cryptocurrency traders because they reduce the number of new bitcoins being generated by the network. This in turn limits the supply of new coins, so prices could rise if demand remains strong.
While this scenario has played out in the months before and after previous halvings, which resulted in bitcoin’s price appreciating rapidly, it is important to remember that the conditions surrounding each halving are different.
As such, demand for bitcoin also tends to fluctuate dramatically.
Although bitcoin has gained more than 20% since the beginning of the year, where this halving may differ from its predecessors is the volatile and uncertain economic environment in that it has taken place.
The halving of Bitcoin occurs due to the inbuilt protocols in the design of its software, which was created by a mysterious entity operating under the pseudonym ‘Satoshi Nakamoto’.
While Satoshi has not definitively explained the reasons why these halvings were put in place, many have theorized that the system was designed to distribute coins more quickly at the beginning to incentivize people to join the network and mine new blocks.
On the basis of this theory, block rewards were programmed to halve at regular intervals because the value of each coin rewarded was deemed likely to increase as the network expanded.
It will be possible for traders to make profits from the next halving by speculating on bitcoin’s price movements in the weeks and months surrounding the event.
Contracts for difference are popular ways to speculate on bitcoin price movements because they enable traders to go both long and short, and possibly profit on the price movements in either direction.
As such, many observers have speculated that bitcoin’s price will rise in the weeks before and after the event.
This is partly due to the fact that the halving is expected to draw increased attention to bitcoin, as well as due to the fact that the halving will reduce the supply of new coins entering circulation.
However, any price rise will depend on how demand for bitcoin evolves over the course of the halving. As such, increases are not certain, nor is relative price stability, as the cryptocurrency has tended to fluctuate in the past.
This is again the reason why the easiest means of gaining a profit over the course of the halving is through a derivative such as a contract for difference (CFD), allowing you to speculate on price movements without actually buying bitcoins.
CFDs also allow you to manage your risk with stops. The alternative is buying bitcoins directly through an exchange.
However, it is important to remember that all forms of trading carry risk. So, while there will be opportunities for profit, you should never risk more than you can afford to lose.
As such, using guaranteed stops, which always close your trade at the precise level you specify will allow you to risk an affordable level of capital.
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