The price of Bitcoin has been fluctuating since it rose to $28,000 in early October. However, according to data from Bitcoin Block Half, as of press time, there are only 199 days and 21 hours left until the fourth Bitcoin halving, which is currently estimated to take place on April 25, 2024, when the Bitcoin block reward will drop from 6.25 BTC to 3.125 BTC.
Review of past halvings
The reason why Bitcoin halving can become a bull market narrative is that scarcity will increase, so the market believes that it will help push up the price of the currency. It is worth mentioning that in the past, halving usually does not immediately trigger an increase in Bitcoin prices, and it takes several months to a year and a half to ferment. According to statistics:
First halving: 2012, about 12 months after the peak (November 2013), the price of the currency increased by 8450%
Second halving: 2016, about 17 months after the peak (December 2017), the price of the currency rose by 290%
The third halving: in 2019, about 18 months after the peak (November 2021), the price of the currency rose by 560%
Past halvings
Is every rise in Bitcoin really related to halving? David Duong, an analyst at Coinbase, previously wrote a report summarizing the background of the past three Bitcoin halvings, pointing out that Bitcoin halvings happened to coincide with some important historical monetary and fiscal policies:
In 2012, the Fed began purchasing mortgage-backed securities and long-term Treasury bonds for its third round of quantitative easing (QE3).
In the second half of 2016, Brexit sparked fiscal concerns in both the EU and the UK, leading to an increase in BTC purchases.
In 2020, central banks and governments responded to the COVID-19 pandemic with unprecedented fiscal stimulus, which pushed up global liquidity.
Therefore, he believes that in addition to paying attention to the supply and demand dynamics of BTC, investors must also have a clear understanding of the market background and need to understand the impact of the US dollar trend, interest rates and global liquidity.
With the exception of the third halving, the evidence from these halving events supporting Bitcoin’s price action is not entirely clear-cut.
Bitcoin velocity at three-year low
In addition, if we interpret the Bitcoin data, the current Bitcoin circulation velocity is at its lowest point in three years and continues to decline. In this regard, Ki Young Ju, co-founder and CEO of the on-chain analysis company CryptoQuant, interpreted that this situation has two aspects: "It can be seen as positive because whales are holding BTC, and it can also be seen as negative because BTC is not being transferred to new investors."
In summary, the short- to medium-term trend of the cryptocurrency market is still unclear, and the SEC, another major narrative "Bitcoin spot ETF", is still maintaining its delaying tactics. As to whether the halving can really have a positive impact on the price of BTC, further observation is needed.
