Bitcoin halving history — why this time may be different

Historically, each Bitcoin halving has occurred a year or two before a new all-time high, a deflationary mechanism laid out by Satoshi Nakamoto in the Bitcoin code. 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 decrease 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 sparked another rally, some market observers said. But the upcoming halving breaks that 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.

This article analyzes how Bitcoin’s price has reacted to past halvings. Here are our findings.

November 28, 2012: 50 BTC halved to 25 BTC

Nearly four years after the Bitcoin genesis block was generated, the network experienced its first halving.

There were doubts in Bitcoin’s nascent community about whether a slowdown in supply would drive up prices, or whether the halving was already priced in, as a then-teenager Vitalik Buterin argued in Bitcoin Magazine. Bitcoin enthusiasts gathered at parties around the world to celebrate the halving.

According to TradingView data, Bitcoin was trading 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.

In the aftermath of 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 are divided over how the second halving will 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.

In the months following the second halving, the price of Bitcoin gradually increased, then accelerated in May 2017. By December 2017, Bitcoin hit a new high of approximately $19,188, a market event that occurred within a year and a half of the halving.

May 11, 2020: 12.5 BTC reduced to 6.25 BTC

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

A new cryptocurrency exchange founder named Sam Bankman-Fried tweeted: "Hey guys I think the Bitcoin halving happened 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 over $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 may seem silly to question whether the next Bitcoin halving will lead to a price surge, but this time the situation is clearly different.

In January this year, after the dust settled on the U.S. Securities and Exchange Commission (SEC)'s decade-long struggle to approve a spot Bitcoin ETF, Bitcoin embarked on a sustained upward path, soaring to a record high of over $73,000.

This is uncharted territory for the halving, as previous halvings have occurred with Bitcoin’s price well below its previous peak.