Halving is an important event and has been present in the Bitcoin source code since the beginning, being the main element of inflationary control and the biggest impact on the price of the 21 million Bitcoins to be issued.
Therefore, in the genesis block, in 2009, the miners received 50 BTC as a reward. This has already been reduced to 25 BTC in 2012 and again to 12.5 BTC in 2016, and 6.25 in 2020.
After halving, the price rose from $12 in November 2012 to a maximum of $1,100 in November 2013. Similarly, the second halving caused the price to rise sharply 11 months later, from $650 in July 2016 to over $2,500 in May 2017.
The most direct interpretation of this is that the halving introduces a restriction of supply, boosting demand, always between 200 days and 16 months.
In the first halving price increase, we saw a 37-fold increase from $31.50 to $1,178. From the 2nd to the 3rd halving, we saw a 16-fold increase from $1,178 to $19,800.
Price performance after halving
The Bitcoin rally after the 2016 halving started 2 months after the event. This year, the price of Bitcoin fell after the May 11, 2020 halving, followed by unusually high volatility that lasted 30 days.
On July 28, approximately 2 months after the halving, the price of Bitcoin finally broke the $11,000 barrier for the first time in 349 days. At the time of this writing, Bitcoin was around $11,712 and had increased by 36.1% since the reduction of the miners‘ commission.
Bitcoin will reach $340,000 if the price repeats the 2016 halving cycle pattern
With the price of Bitcoin System finally breaking the $10,000 barrier for the first time since September 2019, it may not be a surprise that people are looking to invest in Bitcoin.
We’re in a rally, the data suggest
According to a recent Glassnode report, Glassnode added that every time the profitability of the UTXO metric, which looks at Bitcoin’s unspent inventories, exceeds 95%, we are faced with a rebound that could last up to 3 months. This information is also analyzed by IntoTheBlock and confirms the same expectation, as we can see in the graph below.
As can be seen in the graph above, the number of addresses with a retention period of less than 30 days, which IntoTheBlock classifies as „merchants“, has increased over the past two months, reaching a 12-month high of 3.18 million addresses with a total of 1.94 million BTC.