Bitcoin's New Renaissance: The Halving
The year 2023 represented a new Bitcoin renaissance, ushering in a new promising epoch after the bearish 2022. Last year bitcoin displayed remarkable strength by surging 154%, although numerous higher beta tokens outpaced this growth.
While the recent launch of eleven (11) new Bitcoin's spot ETFs has dominated industry discussions, a significant catalyst may follow this development. The halving, as a cyclic event, occurs every four years. It plays a pivotal role in preserving Bitcoin's scarcity, capping its maximum supply at 21 million units. At the outset of January 2024, the available supply stood at 19,59 million units.
Halvings, integral to Bitcoin's protocol, precisely halve the block reward bestowed upon miners. In 2020, this reward decreased from 12,5 to 6,25 bitcoin units, and the upcoming halving in 2024 will further reduce it to 3,125.
Drawing from the 2020 halving as a benchmark, Bitcoin's spot price soared by an impressive 1263% between the halvings of 2016 and 2020. Examining the trajectory from the 2020 halving to the subsequent all-time high, Bitcoin experienced a remarkable 654% ascent.
Source: 21metrics
Another factor that determines bitcoin's price history is the rise of spot price between the halving event and the subsequent all-time high (ATH). Between the most recent halving event of 2020 and the following year's all-time high, bitcoin experienced an impressive 654 percent ascent.
Historically, between the halvings of 2012 and 2016, the price increased by a total of 5187 percent. Additionally, between the halving of 2016 and the subsequent year's all-time high, bitcoin's spot price climbed by 2922 percent. It can be said that halving events act as a catalyst for price increases both before and after the event.
Source: 21metrics
A fortiori, institutions are also interested in the upcoming event: MicroStrategy's (MSTR) acquisitions have risen to a total of 56 650 bitcoins this year, while in 2022 the company’s purchases amounted to a modest 8109 units. MSTR has been cyclically increasing its purchases towards the April's halving.
