5 Things You Didn’t Know About Bitcoin Half and BTC Price

Every four years, the Bitcoin (BTC) community celebrates the Bitcoin halving. Many BTC market analysts see this as a quadrennial event due to the historical eclipse of the cryptocurrency market as a whole.

As the market approaches Bitcoin's fourth halving on April 19, let's dive into five fascinating facts about this event that even seasoned crypto-enthusiasts may not know.

Since the first half, the price of Bitcoin has increased by more than 650,000%.

Historically, the value of Bitcoin has risen in halvings, although this largely depends on the balance of supply and demand.

Historical data provides some insight: After November 28, 2012, the day of bitcoin's first half price drop, the price rose from $11 to a then-record high of $1,240 a year later. Similarly, after the second half in July 2016, the price of Bitcoin rose from around $650 to a new record high of $20,000 in December 2017.

In May 2020, after the third quarter, the price of Bitcoin rose from $8,8000 to $69,000 in November 2021.

Following the events of the Bitcoin halving, a number of incentives fueled interest in Bitcoin. For example, in 2020-2021, the generally ambiguous stance of global central banks significantly contributed to Bitcoin's price rally.

Related: Crypto Market Downplays Long-Term Impact of Bitcoin Halving: Bitwise

The other half examines the economic viability of mining

Each halving reduces the revenue miners have to confirm transactions, making profitability more challenging, especially for those with high operating costs. This situation forces miners to upgrade to more efficient technology or cease operations.

For example, after the third Bitcoin halving in May 2020, the average price of one BTC rose, as the blue wave in the chart below shows.

Increased operations have forced smaller players out of the market, potentially increasing network centralization.

Pre-half price rallies can be speculative.

Speculation on Bitcoin's halving often leads to speculative price increases.

For example, in the six months leading up to the 2020 half-year, the price of Bitcoin increased by more than 40%, from $7,000 in November 2019 to nearly $10,000 in May 2020.

These gains are often generated by speculative investors taking advantage of post-halving price increases, reflecting historical patterns and leading to volatility.

The post-halving theory of price increases is based on a supply shock. In each of the first three halves, the daily production of Bitcoin decreased from 50 to 25 to 12.5, and most recently in 2020, it decreased to 6.25 BTC per block. If demand remains strong, this discount could result in significant price movement.

For example, the year after the first half of 2016 saw a nearly 300% increase in the price of Bitcoin, partly due to this supply shock.

Macroeconomic Impact on Bitcoin Half Cycle

The broader economic environment plays a critical role in shaping the impact of Bitcoin halving on its price.

For example, the halving in 2020 coincided with a period of loose monetary policies, including near-zero interest rates in the US. This particular situation contributed to Bitcoin's appeal as “digital gold”, helping its price rise to around $8,000 at the time. Halve in May 2020 to a peak of nearly $69,000 in November 2021.

The last Bitcoin halving will happen in the next century

Thanks to the halving process, the last Bitcoin is expected to be released around 2140 AD. After the latter half, miners will no longer receive block rewards in new BTC but will rely solely on transaction fees for income.

This shift could fundamentally change Bitcoin's security and economic model, affecting everything from mining participation to transaction costs.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.