Every four years, the Bitcoin (BTC) community celebrates the Bitcoin halving. This event, which is approaching on April 19, is seen by many BTC market analysts as a significant milestone that has historically had a bullish impact on the cryptocurrency market as a whole.
As we approach Bitcoin’s fourth halving, let’s explore five fascinating facts about this phenomenon that even experienced crypto enthusiasts may not be aware of.
1. Bitcoin’s price has increased by over 650,000% since the first halving: Following each halving, Bitcoin’s price has historically experienced an upward trend, largely influenced by the balance between supply and demand. Historical data reveals that after the first halving on November 28, 2012, Bitcoin’s price surged from $11 to a record high of $1,240 a year later. Similarly, after the second halving in July 2016, the price skyrocketed from around $650 to a new all-time high of $20,000 in December 2017. After the third halving in May 2020, Bitcoin’s price surged from approximately $8,800 to reach $69,000 in November 2021. Therefore, the returns on Bitcoin since the first halving are an astounding 650,000%.
2. Halvings test miners’ economic resilience: Each halving reduces the income that miners receive for verifying transactions, making profitability more challenging, especially for those with higher operational costs. This situation forces miners to either upgrade to more efficient technology or cease operations. For example, after the third halving in May 2020, the average cost to mine one BTC increased, causing smaller players to exit the market and potentially increasing network centralization.
3. Pre-halving price rallies can be speculative: The anticipation of a Bitcoin halving often leads to speculative price increases. In the six months before the 2020 halving, Bitcoin’s price increased by over 40%, from around $7,000 in November 2019 to approximately $10,000 by May 2020. These gains are often driven by speculative investors hoping to benefit from the post-halving price increase, resulting in volatility.
4. Macroeconomic impact on Bitcoin halving cycles: The broader economic environment plays a crucial role in shaping the impact of Bitcoin halvings on its price. For example, the 2020 halving coincided with a period of loose monetary policies, including near-zero interest rates in the U.S. This unique situation contributed to Bitcoin’s appeal as a “digital gold,” causing its price to soar from around $8,000 at the time of the halving in May 2020 to an all-time high of nearly $69,000 by November 2021.
5. The last Bitcoin halving will occur next century: Thanks to the halving process, the final Bitcoin is projected to be mined around the year 2140. After the last halving, miners will no longer receive block rewards in new BTC but will rely solely on transaction fees for revenue. This shift could fundamentally change Bitcoin’s security and economic model, impacting factors such as miner participation and transaction costs.
It’s important to note that this article does not provide investment advice or recommendations. Every investment and trading decision comes with risks, and readers should conduct their own research before making any decisions.