With less than a year remaining until Bitcoin’s fourth ever halving, speculation has already begun on whether this one will be followed by the same or similar bull runs as the previous ones.
In-depth data shows that the asset’s price performance has been rather identical before and after the last two such events.
The Halving Effect
Upon creating the network, the anonymous developer Satoshi Nakamoto incorporated an event called the halving, which occurs every 210,000 blocks (appr. every four years) and slashes the rewards miners receive in half to slow down the speed at which new BTC is being created.
Due to basic economic factors, these events have had positive effects on the asset’s price performance, as the valuation rises, at least in theory, when the supply slows down while the demand remains the same or increases.
As such, each of the past three halvings has been followed by price runs. The last one was in mid-May 2020, and BTC started a notable bull cycle in the next year and a half, which resulted in an ATH marked in November 2021 at $69,000. The situation was similar after the 2016 halving, as the then-ATH came in December 2017 (almost $20,000.)
BTC Price Performance Before/After Halvings. Source: Twitter
As the graph above demonstrates, the asset’s performance has been rather identical before and after the last two halvings. It all starts with a 1.5-2 year bull cycle, followed by massive corrections and sideways trading. According to these stats, BTC has already bottomed after the near-400-day bear market, which culminated last year when it dumped below $16,000.
Will History Repeat?
All financial gurus will rush to tell you that past performances should not be indicative of future ones. A recent Coinbase report claimed the same, stating that the effects of the upcoming halving are still unclear, mainly due to macroeconomic factors and regulatory uncertainty.
However, there were similar reports before the 2020 halving, claiming that the asset’s valuation was already priced in and that investors shouldn’t expect any fireworks, which wasn’t the case.
Nevertheless, it’s still hard to predict BTC’s future performance, after all, even the highly-popular AI chatbot ChatGPT refrained from doing so recently.
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