Tuesday, October 24, 2023

Bitcoin Returns Following Halving 2012-2020 PART 2

In my previous post (link below), I looked at what has happened to the Bitcoin price 6 months after the 3 previous halving events.

https://www.reddit.com/r/CryptoCurrency/comments/16lr5a5/bitcoin_returns_following_halving_20122020/

I became interested in this as there has been a narrative "that the 6 months after halving is when the bull run happens and the % returns after halving have diminished with each event."

I therefore wanted to review this by looking at the figures to see if this thesis is supported.

To recap the figures showed the 2020 halving had a stronger percentage return 6 months after halving to the 2016 halving event, which was unexpected although could be explained by the black swan event of Covid and the disruption it causes to previous lifestyle practices and the ultra low interest rate environment.

I therefore wanted to explore this further, using additional data and time periods prior to and post halving to see what affect this has.

Bitcoin Monthly % Returns

Bitcoin Price and % Returns Pre and Post Halving

* Prices are validated from various sources including Statmuse, Yahoo, Coinmarket Cap

**Open prices on the day are used, different sources do list slightly differing prices

*** Prices and percentages are rounded to the nearest whole number

****Halving event tables and calculations are my own

****Differing dates are given for the 2024 halving event, yesterday was not a typically day!

2012 The halving event gave strong returns at halving from 6 months prior as well as 6 and 12 months post halving

2016 The halving event again gave returns prior as well as post halving, although diminished returns from the 2012 halving

2020 The price at halving had actually declined from 6 months prior, which hadn`t happened in the previous 2 halving events. Returns were again strong 6 months and 12 months post halving with both the 6 and 12 month post halving returns being stronger than the corresponding 2016 halving.

I`d suggest the decline in price post at halving compared to 6 months prior is very likely due to the proximity of the event to the onset of the Covid 19 pandemic, having hit a high in February 2020 of $10488.

Bitcoin Price and % Returns 12-36 Months Post Halving

If we zoom out a bit further things begin to become even more interesting.

2012 The price has declined from 12 months after halving at the 24 and 36 month point, although returns are still very substantial from the halving date.

2016 The price continues to rise post halving at the 24 and 36 month point.

2020 The price has declined from 12 months after halving at the 24 and 36 month point, similarly but on a smaller level to the 2012 halving

This leads me back to the old adage "past performance is no guarantee of future returns."

I`m aware that when only relying on 3 halving events the data set is extremely small and the difference in the crypto space and it`s development between 2012 and 2020 is substantial.

What are your thoughts, where do you think we go with the next halving and what could it look like compared to the previous 3?


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