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What does History Show About the Upcoming Bitcoin Halving?

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On the dawn of the week which will see Bitcoin’s third halving a lot of questions and speculation are still hovering over. This certain event, which brings a cut in the rewards that occur when a new Bitcoin block is mined, is straightforward enough in its execution, but its impact is still a mystery. 

However, this event has taken place twice before, and in general, the history of the last two halvings have shown that it is probably a good event for the market as the price of Bitcoin has only gone up since the very first halving, and it has gone up a lot. That being said, Bitcoin has undergone a lot in the last eight or so years, and more than just the halving has impacted its price. 

But, looking back at history and how the market reacted to the Bitcoin halvings before we can start to perhaps draw some parallels as there are similarities, and with that, perhaps the path will be seen again in the time coming after this halving on May 12. 

What’s happened before?

The first halving took place on November 28, 2012, and the second on July 8, 2016. As these events continue to happen, so the inflation  level will keep shrinking until the final block is mined before the 33rd halving on block 6,929,999 and here the  the mining reward will drop to 0, with a technical supply cap of 20,999,999.9769 Bitcoins. The last coin is expected to be mined in March 2140.

The first halving in 2012 took the reward from 50 coins down to 25 coins. With an assumption that 144 blocks are mined per day, this event caused daily supply adding to the circulating supply to decline from 7,200 to 3,600 coins.

The second halving took that 25 coins and cut it by 50 percent to leave it at 12.5 coins and is what we currently see being rewarded. This meant that new coins fell from 3,600 to the current rate of 1,800 per day added to the supply.

Looking at these two events and their similar occurrences, we can also see a similar pattern in the impact of such an event on this asset. 

In both halvings previously, there were bull runs prior to the event. But, unlike the first halving, where the upward trend began one year before the halving to the event, Bitcoin experienced a second bull run, but it was nine months prior.

Bitcoin’s peak to it’s all time high of $20,000 saw a +9,054% appreciation in price between the relative price bottom of $213 on September 21st, 2015 and the relative price peak on December 16th 2017, 18 months after the second halving. This is  similar to what happened in the first instance first halving and, this bull run also saw a fall of -80%, bottoming out in December 2018.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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