The price of BTC usually drops before or shortly after the halving event. The question is how long it will take for Bitcoin to rebound.
Bitcoin mining is the process by which transactions are verified and added to the blockchain through computational work. Miners play a crucial role in maintaining the integrity, currency, and immutability of the blockchain ledger. As a reward for their efforts, miners receive newly created Bitcoins.
Since the creation of Bitcoin, there have been four halving events, with the last one taking place on April 19, 2024.
Date |
Price 1 month ago |
Price 1 month later |
November 28, 2012 |
$10.26 |
$13.42 |
July 9, 2016 |
$583.11 |
$597.5 |
May 11, 2020 |
$6,909.95 |
$9,850 |
Around each event, there was a slight drop in the price of BTC. Reducing rewards poses financial challenges, especially for those who rely heavily on mining revenue.
Bitcoin's fixed supply exacerbates this problem, potentially leading to bankruptcy if rewards decrease without a corresponding increase in transaction fees or the value of Bitcoin.
2012 halved
In 2012, Bitcoin was still a new asset, relatively unknown to the general public. Priced at around $5-6 at the start of this year, BTC has reached $10.
The first Bitcoin halving occurred at block 210,000, which reduced the block reward from 50 BTC to 25 BTC. This event sparked concern among crypto investors who feared it would discourage miners. Coincidentally, this happened at a time when Bitcoin was gaining mainstream attention.
Before the 2012 halving, the price of Bitcoin was around $10.26, with no significant price movement before the event. One month after the halving, the average price had increased to $13.42.
2016 halved
The second Bitcoin halving occurred on July 9, 2016, reducing the block reward from 25 BTC to 12.5 BTC. This event coincided with increased media attention on Bitcoin and cryptocurrencies, accompanied by the rise of altcoins and ICO hype.
Before the 2016 halving, the market had already priced in the event. Bitcoin reached $766 per unit on June 16 before falling 13.83% to $660 on the halving date. It took about six months for the Bitcoin price to recover and reach its previous highs.
However, it is fair to say that the price drop is not solely due to the halving, hence the time it took Bitcoin to recover. Nevertheless, by December 31, 2016, the price of Bitcoin had risen to $963 per unit, surpassing $1,000 by the end of the year.
2020 cut in half
The third Bitcoin halving occurred in May 2020, reducing block rewards from 12.5 BTC to 6.25 BTC, a level that remained until the fourth halving in April 2024. Over the six months before the 2020 halving, the price of Bitcoin jumped 300%. following a similar trend to previous halving cycles.
However, just before the 2020 halving, Bitcoin experienced a major market crash on March 11, 2020. The price dropped from $7,944.05 to $4,857.31, a significant decline of 38.85%.
On May 10, the price of Bitcoin was $9,885. In less than two months, BTC surpassed this level and continued, reaching almost $30,000 by the end of the year.
Overall, Bitcoin saw a significant rebound in late 2020, rising from around $11,000 in October 2020 to around $60,000 in March 2021. Bitcoin closed 2020 at $29,228 per coin, marking a remarkable increase of 302 % for the year.
What to expect after the halving in 2024
In the three months leading up to the fourth halving in April 2024, the price of Bitcoin saw one of its biggest surges in history. During this period, Bitcoin surged 180%, reaching an all-time high of $71,000, a remarkable year-to-date milestone.
Samson Mow recently highlighted the importance of the impending Bitcoin halving. Mow called it “the spark of a massive supply shock.”
Crypto analyst Ali Martinez suggested in December that Bitcoin's upcoming halving could fuel a long period of uptrends for the leading digital asset.
Anthony Pompliano pointed out that despite the recent significant crash, Bitcoin (BTC), the largest cryptocurrency by market capitalization, has appreciated eightfold since the previous halving event in 2020.
Changpeng Zhao recently referenced his tweet from October last year, in which he mentioned adding a Bitcoin halving page to Binance. He also shared his views on this event, noting that historically, around a year after a halving, the price of Bitcoin begins to reach new highs. While the price won't double overnight, CZ pointed out that many people often start to wonder why this price increase is happening.
Investment banks, such as JP Morgan and Goldman Sachs, remain cautious. Goldman Sachs informed Caution to clients in interpreting past Bitcoin halving cycles. They noted that while previous halvings often caused Bitcoin's price to increase, the timing of new all-time highs varied widely.
The bank's Fixed Income, Currencies and Commodities (FICC) and Equities team highlighted the need to consider current macroeconomic conditions when assessing the impact of reduction events. half on Bitcoin prices. This advice was shared with clients on April 12 ahead of the fourth Bitcoin halving in April 2024.
Legendary trader Peter Brandt expressed an optimistic view, suggesting that the “pump” cycle is still in action.
Conclusion
Historically, Bitcoin prices have risen following halving events. After the first halving in 2012, the price rose from $12 to $126 in six months. Similarly, after the second halving in 2016, the price of Bitcoin rose from $654 to $1,000 in seven months. In 2020, after the third halving, the price increased from $8,570 to $18,040 during the same period.
However, price fluctuations are caused by many factors, even during halving periods. It is important to recognize that a rise in the price of Bitcoin following a halving event is not guaranteed. The highly anticipated nature of these events implies that if a price rise were certain, rational investors would likely buy in advance, which could drive the price higher before the halving.