What to expect after the Bitcoin Halving: a look at post-halving performance

The Bitcoin halving is just around the corner, and it's the most significant event the cryptocurrency market has ever seen. Each event has a huge impact on supply, demand, and price appreciation after the halving. But since the price of Bitcoin has already hit new all-time highs before the first halving, how might this change the performance after the halving?

What is 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 around 900 new BTC per day while contributing to the security of the Bitcoin network. After the next halving, the number of new BTC added per day will be reduced to about 450. As the data below will reveal, sudden changes in supply coupled with an increase in demand are often events to watch out for.

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 BTCUSD 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 expected to take place in mid-XNUMX and is ready to become the most important event in the history of cryptocurrency. While the phrase "this time is different" is considered the most dangerous thing in investing, this time, when it comes to Bitcoin, the situation is very different than in the past.

Despite the huge bull markets that follow each halving, none of these rallies hit all-time highs. In 2024, Bitcoin has already reached an all-time high, which could mean a further decline in performance, or it could mean a shocking rally that surprises the masses and only pushes up the price of each BTC even further.

With each Bitcoin halving, market participants are increasingly noticing its powerful impact on price appreciation. The halving is a well-known event, and in 2024, post-halving performance could be preempted by so-called smart money, whales, and institutional investors who know the type of possible gains.

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.

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.