The Halving is almost here, bringing about the most significant event in the Cryptocurrency market ever. Each event has had a dramatic impact on supply, demand, and price appreciation post-halving. But with Bitcoin price already setting a new all-time high before the halving for the first time ever, how might this change post-halving performance? Let’s take a closer look.
What is the Bitcoin Halving?
The Bitcoin Halving is a recurring event happening approximately every four years. By design, it is intended to increase the scarcity of BTC and strengthen the security of the network. However, it has the unintended effect of bringing more participants, speculation, and volatility to Crypto markets, driving Bitcoin price to astronomical new highs.
Currently, miners unlock about 900 new BTC each day while contributing to the security of the Bitcoin network. After the next halving, this will be reduced to roughly 450 new BTC each day. This abrupt change in supply, coupled with growing demand is often an event worth paying attention to, as the following data will reveal.
Past post-halving performance examined
The first ever Bitcoin halving occurred on November 28, 2012. BTCUSD traded at around $10. Within one year, Bitcoin price climbed by nearly 10,000% to over $1,200 per coin. At this point, the top Cryptocurrency was still in its infancy, and few paid attention to the impact the halving had on price action.
The second halving took place on July 9, 2016, some four years later. Cryptocurrencies were still relatively unknown at this point in time. However, new altcoins were starting to gain traction and the industry surrounding Bitcoin begane to develop. 16 months later, BTCUSD rallied from $570 at the July 2016 halving to just under $20,000 per coin, representing a 3,400% post-halving performance.
By the third halving, which took place on May 11, 2020, the world had started to realise the correlation between performance and the proximity to the halving event. The halving happened just months following the COVID pandemic and unprecedented money supply expansion, resulting in a perfect storm for Bitcoin and investors. Within a year, Bitcoin soared from under $9,000 per coin to more than $65,000 per BTC. Although this is substantial in USD terms, this was only a 625% gain compared to 3,400% and 10,000% previously, setting the precedence for diminishing returns.
Why the 2024 Bitcoin Halving could be different
The Bitcoin Halving in 2024 is pegged for mid-April, and is already gearing up to be the most important event in Crypto history. While the phrase “this time is different” is considered the most dangerous in investing, this time, when it comes to Bitcoin, things are very different to the past.
Despite the enormous bull markets that follow each halving, none of these rallies set a new all-time high beforehand. In 2024, Bitcoin has already set a new all-time high, which could either mean further diminishing performance, or a shocking rally that surprises the masses and only adds to the price tag of each BTC further.
With each Bitcoin Halving, the market participants increasingly took note of its powerful impact on price appreciation. The halving is a publicly known event, and in 2024, the post-halving performance could have been front-run by so-called smart money, whales, and institutional investors, who are aware of the type of gains that are possible.
Whether or not this means less performance post-halving remains to be seen. However, the reduction in new BTC available to miners should still impact the delicate balance of supply versus demand in favour of more price appreciation ahead after the event.
Factors fuelling increased profit potential in Crypto
The emergence of spot Bitcoin ETFs in the United States are one of the major factors causing the new price record ahead of the halving, and could further ignite a bull market post halving. Spot Bitcoin ETFs have been absorbing as much as 10 times the new supply from miners, and post halving this could increase to 20 times the new available supply if ETF demand remains consistent.
Combined with demand from retail investors hearing about the halving in the media and in social circles, price could still rise substantially, even though Bitcoin is currently trading above former all-time highs from 2021 at $68,000 per coin.
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Conclusion
The Bitcoin Halving is a highly anticipated event that has historically led to significant price appreciation and volatility in the Cryptocurrency market. With Bitcoin already setting new all-time highs before the 2024 halving, the post-halving performance could be even more impressive than previous cycles. Traders looking to capitalise on these market movements should consider using PrimeXBT’s Crypto Futures platform.
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