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By Brenton Naicker 
17h ago
Bitcoin halving. It is everything anyone in the crypto world has been able to talk about in the past few months. It is undoubtedly the most anticipated crypto event of 2020, and many believe it will be the catalyst to shoot Bitcoin beyond past all-time highs. But what exactly is halving and what can we realistically expect?
One of the close artistic qualities of the Bitcoin network and protocol (the rules that are built into the software) is that the supply of Bitcoin and the way new coins are introduced to the network is transparent and encrypted, which means that they cannot be changed. This is exactly how we know that only 21,000,000 BTC will be created, as is the case in this set of rules. Every 10 minutes / 1 block, miners on the network are paid a fixed amount of bitcoins for their network maintenance and security work. This reward is halved every 210,000 blocks (+ – 4 years).
Bitcoin’s block reward started at 50 BTC and there have been two halves since then, the first on November 28, 2012 where the block reward dropped to 25 BTC, and the second on July 9, 2016 where that reward was cut in half to the current 12.5 BTC reward block. The next halving event is expected in May 2020 and will reduce the current block reward from 12.5 BTC to 6.25 BTC. So what could this mean for the price of Bitcoin and, by extension, the entire crypto market? To answer that, we’ll have to review what happened before and after the two previous Halving mentioned above.
Bitcoin’s first halving occurred on November 28, 2012. The price bottomed out 378 days prior to this halving to $ 2.01 and subsequently more than 600% recovered to a high of $ 15.51 just before of halving. However, after halving, Bitcoin recovered more than 3,000% to as high as $ 279.94, just 133 days after halving. This was a rebound of over 13,000% from the pre-bottom half of $ 2.01 to the post-half high of $ 279.94.
The second half of Bitcoin took place in July 2016. Analyzing the trend surrounding this period reveals that the price bottomed out at $ 164, approximately 500 days before the halving event, and subsequently more than 380% recovered to a maximum of $ 630 just before the second half. This was a recovery of over 12,000% from the pre-half fund of $ 164 to the post-half maximum of $ 20,000. The maximum with which we are very familiar.
That was a huge load of data to incorporate, so the key conclusions are:
- Bitcoin tends to bottom out between a year and a year and a half before half
- Collect 380% – 600% in build in half
- Most growth occurs many months after, and not before, the halving event
- Bitcoin recovers between 12,000% – 13,000% from its bottom before half to the top after half
- The new maximum occurs between 130 and 500 days after halving.
- Bitcoin has always broken past all-time highs after every halving event
Now for the exciting part! Based on this, what can we expect for Bitcoin’s next halving in May 2020?
Looking at the recent price action, our pre-bottom half would be around $ 3,100, as of mid-December 2018. Since then, we have already recovered around 280% to $ 8,600, which seems consistent with the behavior. of the previous half. Based on this, we should see a previous high in the middle between $ 11,000 and $ 18,000 sometime before May of this year.
If Bitcoin follows the previous halves, ‘we can expect a new all-time high between 5 and 18 months after half in May, which sets the estimated date between November 2020 and December 2021.
Based on past growth of between 12,000% and 13,000% from the bottom before half to the top after half, a similar growth pattern could mean a new all-time high of between $ 370,000 and $ 410,000 per Bitcoin.
Remember this is not an investment tip and all figures provided are for educational and informational purposes only. Historical performance is not a guaranteed indicator for future results.
Brenton Naicker is a co-founder of Chainlink Capital, a crypto-asset and blockchain technology consulting firm.
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