Bitcoin Halving Approaches: Analyzing Price Impact from Past Events

The Bitcoin halving, a significant event that reduces the rewards for mining by half, is approaching in April 2024. While historical data shows that the price of Bitcoin typically surpasses its all-time high within a few months after halvings, the current price has already achieved this milestone. The halving serves as a catalyst for investor interest, attracting more buyers and potentially driving up demand. Although it does not directly cause the price increase, it underscores the importance of Bitcoin's scarcity. By analyzing performance during halving periods, investors can gain insights into the potential impact of the upcoming event on Bitcoin's trajectory.

2024 is proving to be a banner year for Bitcoin (BTC). It marks, in fact, a significant turning point for cryptocurrency for the growing institutional interestsil success of the first spot ETFs in the United Statesthe achievement of a new historic high and the long awaited halving which should take place in April. We focus precisely on this event which in the past represented a significant turning point for the famous cryptocurrency, with a focus on how much happened in the past to price trends before and after halvings.

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Halving, how does it work?

Despite being a digital currency, Bitcoin cannot be generated infinitely; its defining characteristic is its verifiable scarcity, which underlies its intrinsic value.

When the Bitcoin halving occurs, the number of new coins created is reduced by half. This translates into a 50% decrease in the reward awarded to miners (who use powerful computers to solve mathematical problems and add blocks to the blockchain), with the aim of reducing the number of new coins entering the network. This event is encoded in the Bitcoin protocol and occurs approximately every four years or after the completion of 210 thousand blocks.

Ricompensa BTC pre Halving
Ricompensa BTC post Halving

1st HALVING November 28, 2012
50 BTC
25 BTC

2nd HALVING 09 July 2016
25 BTC
12,5 BTC

3° HALVING 11 maggio 2020
12,5 BTC
6,25 BTC

4° HALVING aprile 2024
6,25 BTC
3,125 BTC

The first Bitcoin halving has halved the reward of miners from 50 to 25 BTC in 2012. Then, four years later, in 2016, ithe second halving further reduced the reward to 12.5 BTC per block. In May 2020, the most recent halving halved the block reward again, bringing it to 6.25 BTC. Finally, the next one, scheduled for April, will halve the reward again bringing it to 3,125.

The last halving is expected in 2140, reaching 21 million tokens in circulation. From that moment on, it will no longer be possible to issue new digital coins on the Bitcoin network.

Source: Tradingview. Bitcoin chart, monthly timeframe.

The impact of halving on the price

Analyzing the behavior of the price of Bitcoin during previous halvings, it emerges that at the time of the event the value never exceeded the previous all-time high. Rather, the maximum peak (ATH) was consistently reached a few months later. However, this time, the price already has successfully surpassed the all-time high about a month before the halving. This upward momentum has probably been catalyzed by the approval of BTC ETFs by US regulatory authorities.

L’halving di Bitcoin it does not act directly as a catalyst for the increase in the value of BTC, but it represents a moment of fundamental importance within the Bitcoin ecosystem.

It is essential to understand that the increase in the price of Bitcoin it is mainly fueled by the growing demand of investors who engage in purchasing this cryptocurrency. However, it should be underlined that the news of the halving, due to its nature of a significant and particularly awaited event, could play a crucial role in attracting even more investors.

Therefore, while halving does not act directly as catalyst for the price increaseits importance in the Bitcoin ecosystem elThe effect of his news on investor behavior cannot be underestimated.

Performace before, during and after the halvings

The table below analyzes it la performance del Bitcoin during previous halvings in three distinct periods: a year before, a year after and during the halving year itself. This approach allows you to evaluate any significant differences in returns over these key periods. It could be a useful method to better understand the impact of the halving on Bitcoin price movements and the expectations that traders have.

1° HALVING
2° HALVING
3° HALVING
4° HALVING

Data Halving
28/11/2012
09/07/2016
11/05/2020
?/04/2024

Performance during the year
160%
130%
300%
?

Performance anno PRIMA l’halving
333%
140%
19%
?

Performance year AFTER the halving
8990%
285%
560%
?

The first halving

On November 28, 2012, the first halving has halved the reward to miners Bitcoin block size from 50 to 25 BTC. In the period between November 2012 and November 2013, a year after its halving, Bitcoin has broken many records. There was a 8.990% increase which caused the price of Bitcoin to skyrocket from around $11 before the halving to over $1,000.

The performance one year before the halvingthat is, from November 2011 to November 2012, the price rose by 333%, going from 3 dollars to a maximum of 13 dollars.

With regard to performance in the halving yearthat is, from January 1, 2012 to December 31, 2012, the price rose from 5 to 13, an increase of 160%.

The second halving

The second halving of Bitcoin has reduced further the block reward from 25 BTC to 12.5 BTC on July 9, 2016.

The price of Bitcoin increased by approximately 285%, going from $648 to around $2,500 from July 2016 to July 2017. Surpassing the previous all-time high of $1,100 of December 2013. That rush didn’t seem to end. A few months later, precisely in November 2017, Bitcoin archives another record. For the first time in history it reached $10,000.

The performance one year before the halving, that is, from July 2015 to July 2016, the price increased by 140%, going from $269 to $648.

Regarding the performance in the halving year, i.e. from 1 January 2016 to 31 December 2016, the price rose from 432 to 996, a 130% increase.

The third halving

The third halving of Bitcoin occurred on May 11, 2020. In this halving, the block reward was reduced from 12.5 BTC to 6.25 BTC. A few months before the halving, in the period between February and March, during the unexpected shock of the Covid-19 pandemic, the price of Bitcoin fell from $10,500 to a low of $3,800.

Before the halving it recovered to reach $10,000. From May 2020 to May 2021, therefore one year after the halving, the price of Bitcoin increased by approximately 560%, going from 8,572 dollars to approximately 56,764 dollars. Also in May 2021, China has banned cryptocurrenciesin about a week BTC lost about 50% of its value.

The yield one year before the halving, i.e. from May 2019 to May 2020, the price rose only by around 19%, going from $7,217 to $8,572, partly affected by the Covid-19 shock.

Regarding the performance in the halving year, i.e. from January 1, 2020 to December 31, 2020, the price rose from 7,179 to 28,993, an increase of 300%.

When and what to expect from the fourth halving

The next halving is now upon us. As anticipated, the halving dates are not set in advance, but based on the current pace, the next event is scheduled for April: some sources indicate the third week, approximately between the 20th and 24th.

This analysis highlights an important point regarding Bitcoin price movements after the halving. While there is no set law or rule that confirms a price increase after the event, there appears to be one correlation between halving and better performance in the subsequent period.

This performance could be attributed to investor expectations, which could be affected by the halving event and the implications it has on the future availability of Bitcoin on the market. However, it is important to note that There are many variables at play in the financial markets and Bitcoin price movements can be influenced by a wide range of factors.

In any case, analyze the historical performances can provide useful indicationsbut does not guarantee that past results will be repeated in the future.