Bitcoin

Bitcoin Halfway to Next Halving – What Can History Teach Us?

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bitcoin (btc) is halfway through its next halving, and analysts are reissuing their predictions on how the price will respond this time around. But market reactions to bitcoin halvings in the past have been difficult to predict, and their results are usually slow to materialize.

Reading: Bitcoin halving price prediction

Bitcoin’s next halving (the 50% reduction in block rewards paid to miners on the network that occurs roughly every four years) is expected to occur around March 30, 2024. moment, the reward will be halved. from 6.25 btc currently to 3.125 btc per mined block.

currently approximately 900 btc (27 million usd) are generated per day. after the next halving, that number will drop to btc 450.

Source: Coin Metrics

At the previous Bitcoin halving, which took place on May 11 of 2020, Bitcoin’s block reward went from BTC 12.5 to BTC 6.25. As far as the price goes, however, the immediate reaction to the event was perhaps less significant than some had expected (and probably hoped for). BTC ended the day itself slightly lower, but according to some observers, the halving was among the triggers for a major bull run that started just over two months later.

The streak, which lasted until April of the following year, took BTC to highs of over $60,000. At that time, a major correction halved the price of BTC over a period of about 100 days, setting up the stage for the second stage of the bull market that brought btc to its all-time high of around $69,000 in November 2021.

However, we still don’t know how the market will react to the next halving. however, what we do know is that the rewards for miners will be cut in half and therefore the price will have to rise for mining to remain profitable.

See also: Bitcoin&039s Price Rises Above 24,000 Amid Mixed Economic Signals. Here&039s What Investors Should Make of It

and given the widespread idea that the cost of producing new bitcoins acts roughly as a floor for the price, a theory even the creator of bitcoins, satoshi nakamoto, has written about, it would make sense that prices they went up Furthermore, the question of whether bitcoin usage will increase enough and whether transaction fees will exceed block rewards remains open.

30-day average. Source: Blockchain.com
30-day average. Source: Blockchain.com

immediate price reactions are rarely seen

Looking back at previous halvings, it is clear that there has rarely been an immediate price reaction to the halving event itself. and given that this is a known event that the market should discount, this is not surprising.

Source: TradingView

What can be seen, however, is that prices on all three past occasions have risen significantly sometime after the halving took place.

third half

Before the previous halving, predictions ranged from a halving without any price impact, to a sell-off caused by miners dumping coins and traders following the “buy the rumor, sell the news,” as well as seeing upward pressure on prices as fewer new coins come into circulation.

however, once the event took place, the reality turned out to be closest to the first prediction, with almost no impact on the initial price.

second half

Going back to the second bitcoin halving in 2016, the price did indeed drop initially, much to the surprise of many holders who expected a price spike from the event. However, just like during the last halving, an uptrend in bitcoin price resumed, sending btc into a massive bull market that lasted until the end of 2017.

See also: 1 BTC to INR: Bitcoin Price in India, Will Bitcoin Price INR become 50L?

Among those who predicted a price increase, independent crypto consultant Richelle Ross wrote in December 2015, when BTC was worth around $400, that she believed BTC would hit $650 after halving the following year. .

The prediction turned out to be correct, if somewhat conservative, with BTC reaching close to the $1,000 level before the year was out.

first half

the first bitcoin halving occurred in 2012. as explained in an article by ethereum (eth) founder vitalik buterin, who was then a writer for bitcoin magazine, the community was divided into two camps on that moment. in the first camp were those who argued that the halving would cause a “supply shock” that would raise the price up to 2 times, and in the second were those who saw the halving as a “known event” for the market. market that would not affect the price at all.

Reviewing this today, we can conclude that what really happened was very much a combination of the views of both sides, and this appears to have been the case for both halvings since then.

yes, the halving is, and always has been, a known event and therefore the immediate impact on price has been negligible. however, the lower supply of new coins entering the market, combined with the fact that miners, all things being equal, will need a higher price to make a profit, has on all three occasions in the past led to higher prices. in the medium to longer term.

so while we don’t know what will happen after the next halving sometime in the first half of 2024, it’s probably reasonable to expect more of the same, and that the event could trigger another bitcoin market cycle .

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more info: – bitcoin miners reach record difficulty as profitability drops- another lone bitcoin miner wins the block race- bitcoin market cycles explained- here’s how is how bitcoin changed since its second halving in 2016- bitcoin halving as ‘a super crypto cycle marketing event’ & his three narratives: six bitcoin halving scenarios and the probability of each

See also: How To Buy Cryptocurrency – Forbes Advisor

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