This is all a part of the Bitcoin mechanism, which was put into place to prevent inflation and help Bitcoin’s price grow.
I believe that Satoshi Nakamoto expected BTC to grow in popularity over the years, and he designed it in a way where the supply of new coins would be dropping as the demand grows. This has a knock on effect of causing the price to go sky-high.
In the past, Bitcoin has had two other halvings, making this last one the third one. Each time after the block rewards get cut in half, the BTC price starts growing. Not immediately, but after some time, typically after a year, or maybe a year and a half. Of course, with only 3 halvings, there is not much data to make particularly accurate stats, but that is kind of how it goes.
Does Halving Affect Price?
Of course, there are some who claim that halving and these price surges are not connected to one another. But, even if halving doesn’t have a direct impact on the prices, most people believe that it does, which causes them to buy BTC, expecting that its price will grow. In doing so, they themselves make its price grow by increasing the demand, so it’s really a self-fulfilling prophecy.
The current BTC price surge may be a consequence of last year’s halving, or it may be only partially influenced by it. There were other positive events, such as launchings of Bitcoin ETFs, Coinbase going public, institutional investors massively investing into BTC coins, to name a few.
I believe that halvings do have an impact on Bitcoin — maybe not because of the mechanism itself, but because of the psychological impact on traders and investors. With roughly three more years until the next halving, BTC now has more than enough time to figure out what it wants to do with its price. By the time the next halving arrives, the crypto world will likely be a lot different than the one we know today, so its impact might be stronger or weaker, too.
Do you think that halving impacts BTC price, or are the surges purely coincidental?