Bitwise Highlights Underestimation of Bitcoin Halving Impact on Price
In a recent analysis, Bitwise, a leading name in crypto index fund management, emphasized how the digital asset market tends to overlook the long-term effects of Bitcoin (BTC) halvings on its price. Historically, these events have been a precursor to significant price surges, counter to the immediate market reactions.
Matt Hougan, Bitwise's Chief Investment Officer, and Juan Leon, a senior crypto research analyst at Bitwise, scrutinized the aftermath of the past BTC halvings in 2012, 2016, and 2020. The findings reveal an interesting pattern: although the price movements in the first month post-halving were modest with an increase of 9% in 2012, a decrease of 10% in 2016, and an increase of 6% in 2020, the following year consistently saw dramatic hikes. Specifically, Bitcoin’s value soared by 8,839% after the 2012 halving, 285% following 2016, and 548% after 2020.
Moreover, Bitcoin spot trading volumes have experienced growth in the year succeeding each halving event, further underlining the lasting impact these moments hold. As Hougan and Leon pointed out, "Of course, we have limited data: We are only working with three historical examples. Still, the picture they paint is relatively intuitive, suggesting that the market prices in the short-term impact of the halving but underestimate the long-term impact. The data also suggests that long-term, the halving may be conducive to price appreciation."
The significance of the Bitcoin halving events in shaping the cryptocurrency’s value trajectory cannot be overstated. Scheduled for April 20th, as per the hash rate marketplace NiceHash, the next halving is highly anticipated. As of now, BTC is trading at $61,486, experiencing a minor downturn of over 3% in the past 24 hours and more than 12% over the last week. This recent movement reflects the volatile nature of cryptocurrency markets, underscoring the importance of understanding the potentially transformative effects of halvings on Bitcoin’s price in the long term.
Analyst comment
Positive news. The analysis by Bitwise highlights that Bitcoin halvings have historically led to significant price surges in the long term. This suggests that the market currently underestimates the impact of halvings on Bitcoin’s price. As a result, the market is likely to see substantial price appreciation following the upcoming halving event on April 20th, potentially leading to further growth in Bitcoin spot trading volumes.
