Bitcoin will see three halvings this decade, the first in 2020, the second in 2024 and the third in 2028. Counting the 2020 halving that actually happened last year, Bitcoin has seen a total of 3 halvings since its launch in 2009. Historically, in the year following Every halving, the price of Bitcoin rose dramatically due to increased demand and decreased supply in the market.
But there is a new type of demand in the market, a much heavier type than the original demand by retail investors who have been buying for more than 12 years. This demand mixed with lower supply and removal of bitcoin from the market is the perfect formula for wild price swings. I’ll get to what this new order is later in this article, but for now, let’s take a look at the past performance of the halves to see what we’re dealing with.
On November 28, 2012, the first ever halving occurred, dropping the mining reward from the initial start from 50 to 25 BTC. 365 days before the halving, the bitcoin price was $2.54. Over the next year, as the supply shock hit, bitcoin surged all the way to $1,007 before calming down a bit, an increase of more than 8000%.
On July 16, 2016, the second halving occurred, which reduced the mining reward from 25 to 12.5 BTC. 365 days before the halving, the bitcoin price was $269.68. Over the next year, as the supply shock hit, bitcoin surged all the way to $2,506 before calming down a bit, an increase of 284%.
On May 18, 2020, the third Bitcoin halving occurred, which reduced the mining reward from 12.5 to 6.25 BTC. 365 days before the halving, bitcoin was at $7,300. Over the next year as the supply shock hit, Bitcoin soared all the way to $64,840, a 788% increase.
At the time of writing, it is estimated that on May 8, 2024, Bitcoin will undergo its fourth halving, causing the mining reward to drop from 6.25 to 3.125 BTC. And sometime in the spring of 2028, Bitcoin will undergo its fifth halving, and the mining reward will drop from 3.125 to 1.5625 BTC.
It is impossible to predict the exact demand for bitcoin. Therefore, it is difficult to predict how much the price will rise after these halvings, but it is safe to assume that the price forecast is very bullish and that the next nine years may look something like this (or better):
“Bbb-but Nik, past performance does not guarantee future price gains!”
While this is true, it ignores all the factors that lead to the continued rise of Bitcoin. The world has a storehouse of value problem, and the free market has identified bitcoin as the solution to this problem. The wealth is now flowing into Bitcoin, as it is poised to be the top performing asset for the second decade in a row.
Bitcoin’s limited supply of 21 million combined with high demand ensures that its price will continue to rise.
As I mentioned earlier, it’s no longer just regular people buying and HODLing, which has caused huge price swings in the past. Now billionaires and corporations are listing it on their balance sheets and countries are making it legal tender. This is a global race to collect as much bitcoin as possible. They don’t earn over 21 million, and everyone wants their piece of the pie.
The first domino fell and game theory became more difficult than before since El Salvador became the first country to offer legal tender for Bitcoin. Ready, ready, go – all countries are now in a race to legally tender for bitcoin and put it on their balance sheet. In the bill passed in El Salvador, merchants will have to accept bitcoins as payment. This means that large companies out there have to learn and use bitcoin on a daily basis which, after seeing the many benefits of BTC, could make them eager to use bitcoin in other countries like the US…
Some countries are already feeling the pressure of not embracing bitcoin, and the more they adopt it, it will only make others want it more. Gabriel Silva, Member of Parliament of Panama. He said On this: “This is important. Panama cannot be left behind. If we want to be a true center for technology and entrepreneurship, we need to support cryptocurrencies. We will prepare a proposal to present to the association. If you are interested in building it, you can contact me.”
Every country on the planet that has not adopted the Bitcoin standard lags behind those that follow. Bitcoiners have all the wealth, and countries will want our business. Countries will offer tax benefits, citizenship to the country, open government-owned land to the public for new housing developments, bitcoin mining incentives, etc.
“We want bitcoin to move here.” said the Salvadoran president, Neb Bukele. Soon, the leader of each country will say these words. Those who say it first will be the big winners.
This will lead to a massive influx of wealth into Bitcoin that we have not seen before. The world is being re-priced in bitcoin. You and I already know this, but the rest of the world has yet to figure it out.
This is another guest post by Nick Hoffman. The opinions expressed are their own and do not necessarily reflect the opinions of BTC, Inc. or Bitcoin Magazine.