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Bitcoin Halving: Was it All Just Hype?

Bitcoin Halving: Was it All Just Hype?

Chris Campbell

Posted May 13, 2024

Chris Campbell

It’s been almost a month since the Bitcoin halving -- the quadrennial event that reduces the rewards for miners by half.

Since, Bitcoin hasn’t seen much action to the upside, leading many to ask:

Was it all just hype?

The answer in two letters: NO. 

While the Bitcoin halving is a major catalyst, it’s always hard to predict how it will affect the crypto markets in the short-term.

BUT

Consider what has happened in past halving cycles.

In 2012, just one month after the first halving, Bitcoin's price was up a modest 9%.

Many people sold. However, those who held on for the long haul were handsomely rewarded.

One year later, the price had skyrocketed by 8,839%!

Of course, this meteoric rise can be attributed to Bitcoin's low market cap at the time, which meant that even small inflows of capital could dramatically impact the price.

But what about other halvings?

One month after 2016’s halving event, Bitcoin's price was down 10%, a drop that closely resembles the current decline from all-time highs.

However, patience once again proved to be a virtue. One year later, the price was up 285%.

The 2020 halving followed a similar pattern.

One month after the event, Bitcoin's price had dipped by 6%. But true to form, one year later, the price had surged by an impressive 548%.

Historical patterns suggest that short-term price drops following Bitcoin halvings are nothing to be worried about.

The real rewards have come to those who held on for the long term. If history is any indication, the year following a halving has always seen significant price appreciation.

Before we go into how high Bitcoin could go…

There’s something else to consider.

Accelerating Adoption

I’m going to preface this by saying up front:

Crypto adoption isn’t easy to track.

Some estimates say crypto is growing at 137% per year. (Ex-Goldman banker Raoul Pal, mainly.)

Others say it’s somewhere around 40% per year, on average.

BUT

If we look at other technologies, even this lowball 40% growth rate begins to look pretty impressive.

For example, according to the International Telecommunication Union, global internet usage increased from less than 1% in 1995 to over 50% by 2019. The average YoY growth rate over this period was approximately 28%.

The introduction of the iPhone in 2007 and the growth of Android devices led to a swift uptake of smartphones.

According to Statista, smartphone adoption in the US grew from around 20% in 2010 to over 80% by 2020. The average YoY growth rate over this period was approximately 19%.

Platforms like Facebook, Twitter, and Instagram have seen meteoric growth. Facebook, for example, went from around 100 million users in 2008 to over 2.7 billion monthly active users in 2020.

Therefore, the average YoY growth rate over this period was approximately 39%.

So, according to these numbers, crypto is being adopted globally faster than the Internet, smartphones, and social media -- three of the most impactful technologies of the past few decades.

But the big question:

How High Could Bitcoin Go?

While the future is always uncertain, Bitcoin's past performance around halving events provides some interesting insights.

Short-term volatility is to be expected, but the long-term trend has been positive.

As the market continues to mature and adapt, it will be fascinating to see how these historical patterns play out in the coming years.

For now, the old adage holds true: past performance is no guarantee of future results, but it certainly provides food for thought.

So how high could it go?

In 2012, as mentioned, Bitcoin went up 8,839% after the halving.

Will that happen again? NO WAY.

With maturity comes the law of diminishing returns.

While Bitcoin's price may continue to appreciate, it's unlikely that we'll see the same astronomical gains as in the past.

BUT…

There are some cryptos that COULD go that high. Even higher.

More on that tomorrow.

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