Why The 2020 Bitcoin Halving Is Different And Might Disappoint Price Spike Expectations Like In 2012 & 2016

In less than a month, the third Bitcoin block halving, arguably the most anticipated event in the crypto space as of now, will take place. After the halving, the reward that miners receive for verifying transactions and maintaining the Bitcoin network will be cut in half.

In theory, the price of Bitcoin should increase after rewards divvy up, as it means Bitcoin will become even scarcer. Recall these mining rewards are the way new Bitcoin is created, and cutting them in half means that new units of the largest cryptocurrency by market capitalization become harder to reach after the Bitcoin halving event.

Halving: Priced In Or Not

Predictions on how the market will respond post-halving vary among leading crypto analysts. Some, notably crypto commentator PlanB, believe that the market has already priced the effect of the rewards reduction reasonably. Another group, among whom is Bitcoin enthusiast Anthony Pompliano and Binance CEO Changpeng Zhao, insists that halving has yet to be factored into the Bitcoin’s price.

In February, Zhao announced that he believes the halving has not been priced in: “The market is not efficient. Most people don’t get information quickly. People need a lot of time to let concepts sink in and adjust,” he said.

The Bitcoin market has witnessed two halving events in its short life — first on Nov. 28, 2012, and second on July 9, 2016. On the first occasion, rewards dropped from 50 BTC to 25 BTC per block, and the second saw a reduction to 12.5 BTC. The upcoming halving will see a further decrease to 6.25 BTC per block.

The First Halving Event Of 2012

Before the halving event of 2012, Bitcoin saw a decent upward trend, rising roughly 135% from just over $5 per BTC at the beginning of the year to the $12 price region by the beginning of November 2012. Post-halving, the trend continued, with BTC surging 90X to approximately $1,180 by the end of 2013.

The period around the first halving (Nov. 28, 2012). Chart by TradingView


The increase in the first few months post-2012 halving coincided with the financial crisis in Cyprus, when the local government intervened with a bailout for banks. Some researchers also found that the final surge between September and November 2013, when BTC exceeded $1,000, was a result of price manipulation.

The Second Halving Event Of 2012

Still, the price pattern of the first halving is noticeable in the months before and after the second halving event. Bitcoin prices were mostly flat for the first three quarters of 2015, around the $300 – $400 price region.

The market picked up in the fourth quarter, however. BTC prices went from the $300 region in Oct. 2015 to over $600 by July 2016. Only a year after the halving, during July 2017, the BTC price had skyrocketed to around $2,800 before peaking at nearly $20,000 in Dec. 2017.

The surge post-2016 halving was explained due to other driving factors. For one, the bull run of 2017 corresponded with the ICO bubble, which emerged that year.

Estimates of how much was raised during ICO events in 2017 vary, but data by Statista estimates that the figure is closer to $6.4 billion. The significance of the ICO boom was such, that it increased the demand for BTC, which, along with Ethereum, was the cryptocurrency many of the ICOs accepted.

Also, 2017 was the year that the Bitcoin protocol update, dubbed SegWit — or Segregated Witness —  was implemented. The SegWit protocol upgrade increased the transaction processing power of the Bitcoin network. Analysts said the network improvement was also a contributory factor to the stellar year that BTC enjoyed in 2017. Increased media attention was another factor that contributed to the most prominent crypto bubble of 2017.

The period around the second halving (July. 9, 2016). Chart by TradingView


The Question Mark Prior To Bitcoin Halving of 2020

Given the circumstances surrounding the first two halving events, it’s difficult to say for sure how the market will react to the coming halving of 2020.

As can be seen on the following chart, unlike the first and the second halving events, Bitcoin is not coming strong and bullish before the actual block reward reduction. According to the Bitcoin halving countdown, there are approximately three weeks left until the halving, as of writing these lines. It’s hard to believe that things will change in that short period.

Pre-2020 Halving BTC Chart. Chart by TradingView


Moreover, the Bitcoin market is more matured now. Since the last halving, a slew of trading products, notably Bitcoin derivatives exchanges, have made it to the market. In fact, the derivatives market is now at least ten times larger than the spot market, according to Bloomberg’s report.

This has brought some level of price discovery sophistication known in the traditional market to the crypto market. Traders can now make bets for or against BTC (long and short). Whereas, opening long positions was the most common way of profiting from crypto in 2016. Also, more institutional players are launching crypto products, more than ever before.


Although raw price data indicates that Bitcoin surges after halving events, there are caveats. The first problem here is that whatever halving data exists is based on only two occasions, which is too limited to conclude. It’s also been established that other factors were more significant driving forces.

Besides, the market evolution discussed above means that the upcoming halving may bring with it unanticipated first-time trends. The COVID-19 outbreak, which is causing a global economic downturn, worsens the uncertainties.

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