Original Source: Rick Maeda, prestolabs
Compiled by: Deep Tide TechFlow
Key Takeaways
- Historically, Bitcoin halvings have been bullish catalysts for BTC’s price.
- However, with only three past events, drawing statistically significant conclusions is challenging.
- The Bitcoin halving may not be a directly tradeable event, but it remains structurally bullish from a supply perspective.
- Under favorable macro conditions, BTC could rally post-halving once again.
The consensus around Bitcoin halvings is that they’re bullish, with many believing it’s a tradeable event. But is this really true? In this article, we delve into past halvings and analyze the upcoming 2024 event through the lens of supply dynamics and macro trends.
What Is the Bitcoin Halving?
The Bitcoin halving is a pre-programmed event that cuts the block reward for miners in half. This mechanism is central to Bitcoin’s monetary policy, ensuring a fixed supply of 21 million BTC while controlling inflation by slowing the rate of new coin creation.
Occurring every 210,000 blocks (roughly every four years), the next halving is estimated to take place around April 20, 2024. When Bitcoin launched in 2009, the mining reward was 50 BTC per block; after three halvings (2012, 2016, and 2020), it will soon drop to 3.125 BTC per block.
Bitcoin relies on Proof-of-Work (PoW) to validate transactions. Miners compete to solve complex mathematical problems, with the winner adding the next block to the blockchain and receiving newly minted BTC. The halving simply reduces this reward by 50%.
The Reality of Past Halvings
At first glance, halvings have been strongly bullish for BTC.
Price Performance Around Halvings
Figure 1 (below) tracks BTC’s price action from one year before to one year after each halving.
👉 Bitcoin Halving Historical Price Trends
Key Observations:
- All three halvings preceded major BTC price rallies.
- The 2012 halving saw the most dramatic post-halving surge (+8,000% in a year).
- However, with only three data points—and vastly different market conditions—extrapolating patterns requires caution.
Bitcoin vs. Traditional Markets
Interestingly, the S&P 500 also outperformed around halvings (Figure 3).
Takeaway: Bitcoin’s performance may correlate more with broader risk-on sentiment than halving mechanics alone.
Key Dynamics to Watch in 2024
1. Miner Sell Pressure
Long-term holders often sell before halvings (Figure 5). This is attributed to miners offloading reserves to upgrade hardware ahead of reduced rewards.
Implication for 2024: With days left until the halving, structural selling pressure may already be in play.
2. Exchange Balances
Exchange-held BTC has declined since 2020 (Figure 6), suggesting accumulation by long-term investors rather than traders.
3. Macro Backdrop
The 2024 halving coincides with expectations of Fed rate cuts (Figure 7). Loose monetary policy typically benefits risk assets like Bitcoin.
Risk: If inflation resurges, the Fed may delay cuts, potentially dampening BTC’s post-halving rally.
Conclusion
The 2024 halving is Bitcoin’s most anticipated yet, amplified by institutional demand via spot ETFs. While past performance doesn’t guarantee future results, the event remains structurally bullish due to:
- Supply shock (fewer new BTC entering circulation).
- Institutional accumulation (ETFs now hold 4.1% of circulating supply).
Ultimately, the halving may not be a short-term trade—but it reinforces Bitcoin’s long-term scarcity narrative.
FAQs
Q: How does the halving affect Bitcoin’s price?
A: Historically, reduced supply has led to price appreciation, but macro conditions play a major role.
Q: Should I buy Bitcoin before or after the halving?
A: Timing markets is risky. Dollar-cost averaging (DCA) is a safer strategy.
Q: Do miners stop selling after the halving?
A: Selling pressure often eases post-halving as miners adjust to lower rewards.
Q: Could ETFs change the halving’s impact?
A: Yes. Institutional demand may amplify the supply shock effect.