Bitcoin halving history — why this time may be different

Author: Jack Kubinec Source: blockworks Translation: Shan Ouba, Golden Finance

Historically, each Bitcoin halving has occurred a year or two before a new all-time high, a deflationary mechanism specified in the Bitcoin code by Satoshi Nakamoto. This is in part because the halving cuts the block reward for miners in half, thereby reducing the production of new Bitcoins, theoretically making Bitcoin more scarce.

For example, with the upcoming halving, the block reward will be reduced from 6.25 Bitcoin (BTC) to 3.125 BTC.

The past three Bitcoin halvings have occurred before all-time highs, followed by a price decline until the next halving, which triggered another round of gains, some market observers said. But the upcoming halving breaks this trend. For the first time in history, Bitcoin hit a new all-time high just before a halving, with prices briefly topping $70,000 this month.

Blockworks analyzed how Bitcoin’s price has reacted to previous halvings. Here are our findings.

November 28, 2012: 50 BTC Halved to 25 BTC

Nearly four years after Bitcoin’s genesis block, the network experienced its first halving.

Bitcoin’s nascent community had doubts about whether a slowing supply would push prices higher, or if the halving was already priced in, as Vitalik Buterin, then a teenager, argued in Bitcoin Magazine. Bitcoin enthusiasts gathered at meetups around the world to celebrate the halving.

According to TradingView data, Bitcoin traded at around $12 before the first halving in November 2012, jumping to $229 in April 2013, and then rising to around $1,132 the following November.

Affected by the collapse of Japanese exchange Mt. Gox, Bitcoin's price would hover in the hundreds of dollars range for the next three years.

July 9, 2016: 25 BTC Halved to 12.5 BTC

By 2016, a slew of new cryptocurrencies had emerged. Shortly after the second halving, Ethereum hard forked following the disastrous DAO hack.

Bitcoin holders were divided on how the second halving would affect the price of Bitcoin. “Right now, I’m feeling disappointed,” one user wrote on the Bitcoin Talk forum, just hours before the block reward halving.

The price of Bitcoin gradually rose in the months following the second halving, then accelerated in May 2017. By December 2017, Bitcoin had hit a new high of around $19,188, a market event that occurred a year and a half after the halving.

May 11, 2020: 12.5 BTC to 6.25 BTC

By the time of the third halving, Bitcoin had already been around for more than a decade and had become a more well-known commodity.

The founder of a new cryptocurrency exchange named Sam Bankman-Fried tweeted: "Hey guys I think Bitcoin halved today, not sure if you heard." TD Ameritrade's market publication published an article questioning whether the halving had been priced in by the market.

Once again, the market underestimated the impact of the halving.

The price of Bitcoin rose from about $8,500 at the time of the halving in May 2020 to more than $40,000 in January 2021. Bitcoin surpassed $63,000 in April 2021 and then broke through the $67,000 mark in November 2021, nine years after the first halving.

April 2024: 6.25 BTC to 3.125 BTC

At this point, it seems silly to question whether the next Bitcoin halving will lead to a price surge, but this time the situation is clearly different.

In January of this year, after the dust settled on the 10-year battle for the U.S. Securities and Exchange Commission (SEC) to approve a spot Bitcoin ETF, Bitcoin embarked on a sustained upward path, soaring all the way to a record high of more than $73,000.

This is uncharted territory for the halving, as previous halvings have occurred when the price of Bitcoin was well below its previous peak.