After a Bitcoin halving, the price often decreases before or right after the event. The query now is: How long will it take for Bitcoin’s price to recover?
The task of Bitcoin mining involves checking the legitimacy of transactions and recording them on the blockchain. Miners contribute significant computational power to ensure the security and trustworthiness of the blockchain network. As a compensation for their work, they are granted new Bitcoins as a reward.
Over the past existence of Bitcoin, there have been a total of four occurrences where its reward for mining was reduced by half. The most recent reduction took place on April 19, 2024.
Date | Price 1 month prior | Price 1 month after |
Nov. 28, 2012 | $10.26 | $13.42 |
July 9, 2016 | $583.11 | $597.5 |
May 11, 2020 | $6,909.95 | $9,850 |
For every Bitcoin event, the price experienced a slight decrease. Mining profits become a concern due to decreased rewards, particularly for those who heavily depend on it.
The limited amount of Bitcoin available makes this problem worse. If the rewards for mining Bitcoin decrease but there are no corresponding rises in transaction fees or Bitcoin’s value, miners could face bankruptcy.
2012 halving
Back in 2012, Bitcoin was barely recognized by most people and its value was roughly between $5 and $6. However, by the end of the year, its price had climbed up to an impressive $10.
At block 210,000, the first Bitcoin reward reduction happened, decreasing the block reward from 50 Bitcoins to 25 Bitcoins during mining. This change brought unease among crypto investors, as they worried it could deter miners. Interestingly, this event transpired just as Bitcoin was beginning to garner widespread public interest.
Before the 2012 Bitcoin halving, the price hovered around $10.26 without major price fluctuations. A month following this event, the average Bitcoin price rose to $13.42.
2016 halving
On July 9, 2016, the second Bitcoin reward reduction took place, changing the block reward from 25 Bitcoins to 12.5 Bitcoins. This occurrence went hand in hand with heightened media coverage of Bitcoin and cryptocurrencies as a whole. Additionally, it marked the emergence of altcoins and the surge of Initial Coin Offerings (ICOs) in the news.
Prior to the 2016 Bitcoin halving, the market had anticipated this occurrence and reflected it in the price. The value of a Bitcoin unit peaked at $766 on June 16, but then dipped by 13.83%, down to $660, on the actual halving day. It required roughly six months for the Bitcoin price to bounce back and surpass its previous highs.
Although the halving event contributed to the decline in Bitcoin’s price, it wasn’t the sole cause. Therefore, it took some time for Bitcoin to bounce back. However, by the end of 2016, Bitcoin’s value had climbed up to $963 per unit, breaking the $1,000 mark before year-end.
2020 halving
The reduction in block rewards for mining new Bitcoins happened for the third time in May 2020, decreasing it from 12.5 BTC to 6.25 BTC. This rate persisted until the fourth halving in April 2024. In the six-month period preceding the 2020 halving, Bitcoin experienced a remarkable price increase of approximately 300%. This trend mirrored past bitcoin halving cycles.
Prior to Bitcoin’s 2020 halving, there was a major market crash on March 11, 2020. The price dropped dramatically from $7,944.05 to $4,857.31, resulting in a substantial 38.85% decrease.
By the end of May 2020, Bitcoin was valued at approximately $9,885. Within just over two months, its value surpassed this mark and continued to rise, peaking at around $30,000 towards the end of the year.
In the final months of 2020, Bitcoin underwent a notable surge in value. The cryptocurrency went from around $11,000 in October to reaching approximately $60,000 by March the next year. By the end of 2020, Bitcoin was worth over $29,000 per coin – a striking 302% price increase for the entire year.
What to expect after 2024 halving
During the three months prior to Bitcoin’s fourth halving in April 2024, the cryptocurrency underwent one of its most significant price increases on record. The value of Bitcoin soared by approximately 180%, peaking at a historic high of $71,000 – an impressive achievement given it started the year below that figure.
Samson Mow has emphasized the significance of the upcoming Bitcoin halving, describing it as “a major disruption in supply.”
you’re fully aware of what a halving entails – it’s the beginning of a significant reduction in supply. You closely monitor ETF investments and market demand. Moreover, you’ve taken notice of the upcoming Hong Kong ETF launches.
In essence, you’re the wise investor purchasing #Bitcoin while others follow the crowd.
— Samson Mow (@Excellion) April 16, 2024
In December, crypto expert Ali Martinez proposed that the upcoming Bitcoin halving might lead to a prolonged phase of price increases for Bitcoin.
Bitcoin’s price trend tends to follow a pattern of approximately four-year cycles, which are primarily influenced by its halving events. In simpler terms, after three years of increasing value, there’s typically a year of decline. Given this pattern, Bitcoin is currently experiencing an uptrend that might continue.
— Ali (@ali_charts) December 29, 2023
Anthony Pompliano pointed out that Bitcoin, the leading cryptocurrency in terms of market value, underwent a substantial drop more recently. However, it’s important to note that prior to this decline, Bitcoin had experienced an approximately eightfold increase since its previous halving occurrence in 2020.
In spite of the market instability, Bitcoin has seen a remarkable increase of eightfold since its last halving. Disregard temporary price fluctuations. The value of this decentralized currency based on sound economic principles has reached over one trillion dollars as investor interest grows worldwide. Excited to discuss this topic further with @cvpayne on Fox Business today.
— Pomp 🌪 (@APompliano) April 16, 2024
Changpeng Zhao recently brought up his tweet from last October, in which he announced Binance would have a page dedicated to Bitcoin’s halving. He also expressed his viewpoint on the topic, explaining that historically, around a year after a Bitcoin halving, its price tends to spike to unprecedented levels. The price doesn’t suddenly double, but many people are left wondering why this price rise takes place.
Investment firms like JP Morgan and Goldman Sachs are urging caution. For instance, Goldman Sachs warned clients about drawing definitive conclusions from past Bitcoin halving events. While these occurrences have historically resulted in price surges for Bitcoin, the timeframe to reach new peak prices has shown significant discrepancies.
The bank’s experts in Fixed Income, Currencies and Commodities (FICC) and Equities team stressed the importance of taking into account current macroeconomic trends when evaluating how Bitcoin price may be affected by upcoming halvings. This recommendation was passed on to clients on April 12 as a preparation for Bitcoin’s fourth scheduled halving in April 2024.
Famous investor Peter Brandt remains hopeful, believing that the current price surge, often referred to as a “buy frenzy” or “price pump,” is still ongoing.
What say you?? $btc
— Peter Brandt (@PeterLBrandt) April 18, 2024
Conclusion
Bitcoins historically experience price increases after every halving event. For instance, following the first halving in 2012, the price jumped from $12 to $126 within six months. The second halving in 2016 was followed by a price surge from $654 to $1,000 within seven months. In line with this trend, after the third halving in 2020, Bitcoin’s price soared from $8,570 to $18,040 within the same time frame.
Despite the occurrence of Bitcoin’s halving, which reduces the reward for mining new blocks, there are still various reasons behind price fluctuations. It’s crucial to keep in mind that a hike in Bitcoin’s price post-halving event is not guaranteed. The anticipation surrounding these events can lead investors to believe that a price increase is inevitable. However, if this were the case, rational investors would probably buy ahead of time, potentially causing an uptick in price before the actual halving takes place.
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2024-04-20 13:13