Hours ago, block 735,000 was mined on the Bitcoin network, which marks exactly half of the cycle between halvings.
Los halvings they are an event within Bitcoin’s monetary policy that cuts coin issuance in half every 210,000 thousand blocks (this happens approximately every 4 years).
Since the last halving, which occurred in 2020, 6.25 bitcoins (BTC) are issued for each mined block. By 2024, the issuance will be reduced to 3,125 BTC per block.
Halvings, as seen throughout the history of Bitcoin, seem to influence the price of the cryptocurrency.
Bitcoin has —unlike fiat money that is printed unlimitedly— an issue that will never exceed 21 million BTC.
Its scarcity is one of the properties that make bitcoin valuable. Halvings, by reducing the pace of monetary issuance, accentuate the feeling of scarcity. This limited supply, added to the fact that the demand for bitcoin has tended to increase over time, causes the price to also increase.
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For example, following the last halving, numerous institutions acquired large amounts of bitcoin. Even state treasuries, such as that of The Saviorhave started to accumulate BTC.
The 3 halvings that Bitcoin has had so far have marked an important trend that seems to repeat itself in each cycle: following reaching a new ATH (acronym in English for «all time high» the historical maximum) the price has never been below the ATH reached in the previous halving.
This can be seen, for example, on the 2016 halving cycle, which occurred on June 11 of that year.
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This trend has been repeated following the 2020 halving, since once the ATH reached in November 2021 above USD 69 thousand (or even the previous ATH above USD 67 thousand) the price of bitcoin has not been —at least , so far—below the ATH for the cycle that began in 2016: $19,600.
In 2016, the price began to lateralize until the end of its cycle, as can be seen in the previous graphs.
Also currently the bitcoin price has moved in a sideways channel between $35,000 and $47,000.
A cycle and a repeating uptrend
Although the high volatility of bitcoin makes it impossible to speak of a definite trend in the short term, in the long term the upward trend is very marked. As has been seen, the halvings seem to be drivers of the price increase in each cycle.
The feeling of scarcity that is stimulated by Bitcoin halvings plays a determining role in the price rally. Analyst Willy Woo has commented that the impact that halvings usually bring is often “overestimated”, by reducing the daily supply of BTC by half.
As seen, BTC prices do not reflect this immediately until at least a year following the halvings. This may be because, following this period of time, the feeling of scarcity begins to affect the market.
In that period between the halving and the historical maximum, the miners usually accumulate the issued BTC, as it has been done. reported CryptoNews. That causes the daily supply to be reduced, leading to an increase in price.
Besides, halving price increase driven by institutional adoption patterns. While there is no clear rule, such adoption patterns may be driven by the emission reduction caused by each halving.
This analysis was carried out in collaboration with the reporter Juan Ibarra.
