What Investors Need to Know About Bitcoin Halvings
What Investors Need to Know About Bitcoin Halvings
Since the cryptocurrency’s inception in 2009, four Bitcoin halvings have occurred. The most recent one took place on April 19th, 2024.
For this graphic, the second in a three-part Demystifying Bitcoin series, Visual Capitalist teamed up with Franklin Templeton to explore Bitcoin’s price performance in the wake of previous halving events.
What Are Bitcoin Halvings?
Roughly every four years, the reward for adding a block to the Bitcoin blockchain is cut in half. This process, which is known as a halving event, is built into Bitcoin’s foundation.
Halvings create scarcity in the Bitcoin market as the supply of newly minted bitcoin being introduced decreases.
Here’s what the mining reward after each halving looks like:
| Halving Date | Mining Reward |
|---|---|
| November 28, 2012 | 25.000 |
| July 9, 2016 | 12.500 |
| May 11, 2020 | 6.250 |
| April 19, 2024 | 3.125 |
After the most recent halving, the reward for adding a block to the blockchain fell from 6.250 bitcoins to 3.125 bitcoins.
The Price of Bitcoin After Previous Halving Events
Though the magnitude of the increases varied, the price of bitcoin consistently rose one, two, and four years after each of the previous halvings.
Historically, the largest gains occur at the end of the four-year cycle, close to the following halving event. The only exception was one year after the first-ever halving, which saw the price of bitcoin increase by 8,782%.
| Halving Date | 1 Year Later (%) | 2 Years Later (%) | To Next Halving (~4 years) (%) |
|---|---|---|---|
| November 28, 2012 | 8,782 | 2,945 | 5,156 |
| July 9, 2016 | 285 | 923 | 1,216 |
| May 11, 2020 | 561 | 239 | 644 |
Will Bitcoin’s price performance after April’s halving follow suit?
Exploring Digital Assets
Halvings mark important dates for the asset class. They have the potential to influence the cryptocurrency’s price by simulating scarcity.
Following the previous three halvings, the price of bitcoin appreciated. If the asset’s price behavior continues along the same trend, investors could benefit following the fourth halving as well.
The third piece in the Demystifying Bitcoin series will examine the disruptive opportunity of the emerging protocol economy.
Learn more about the exciting world of digital assets with Franklin Templeton.
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