According to CoinDesk, July 29 marks the 100th day since the Bitcoin blockchain reduced its per-block mining rewards to 3.125 BTC from 6.25 BTC. Historical data from previous halvings indicates that the bullish impact of this programmed code typically takes effect after 100 days. This event, known as the Bitcoin halving, occurs every four years or after 210,000 blocks are mined, reducing the reward miners receive for validating transactions by 50 percent. The primary objective is to control the supply of Bitcoin, ensuring its scarcity over time, unlike fiat currencies, which experience monetary inflation. Bitcoin's supply is capped at 21 million, and the halving helps manage the pace at which this limit is approached.
The first halving in 2012 reduced the per-block reward to 25 BTC from 50 BTC. Subsequent halvings further decreased the reward, with the latest halving on April 20 reducing it to 3.125 BTC. Previous halvings have led to significant price rallies, with most gains occurring after the first 100 days. Andre Dragosch, head of research at ETC Group, noted that the market tends to have a short memory, but the halving-induced supply deficit should start taking effect from now on. Dragosch's conclusion is based on performance data before and after the previous three halvings in 2012, 2016, and 2020.
The study revealed that the mean excess performance, which is the difference between performance X number of days after the halving and X days before the halving, increases significantly 100 days after the halving and becomes statistically significant, with T-values exceeding 2%. The T-value is a statistical measure used in hypothesis testing to determine how far the sample mean is from the population mean, stabilized by the sample's variability. Dragosch emphasized that 100 days after the halving, the performance difference becomes statistically significant and continues to increase until around 400 days after the halving. The data shows that the mean excess performance rises above 100% from the 100th day after the halving and eventually peaks into four figures. It remains to be seen if history will repeat itself.
