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Only 100 Days Until the Halving
The year of 2023 truly represented a new renaissance after the bearish 2022. In 2023, the leading cryptocurrency bitcoin strengthened by 154%, although many higher beta tokens performed vastly better. Even though bitcoin's anticipated spot ETF has captured most of the industry's airspace, another value driver might actually occur before the spot ETF launch itself. That driver obviously is April's halving. The halving, which occurs cyclically every four years, serves an important function in maintaining the scarcity of Bitcoin, as it limits the maximum supply to 21 million native units. As of the beginning of January 2023, the supply of Bitcoin was 19,59 million units. Halvings literally halve the block reward paid to miners, which decreased from 12,5 bitcoin units to 6,25 in 2020. Similarly, the halving event of 2024 will halve the block reward again, reducing it to 3,125. If we use the most recent halving event of 2020 as a reference, bitcoin's spot price increased by 1263 percent between the halvings of 2016 and 2020. Another factor that determines bitcoin's price history is the rise of spot price between the halving event and the subsequent all-time high (ATH). Between the most recent halving event of 2020 and the following year's all-time high, bitcoin experienced an impressive 654 percent ascent (purple). Historically, between the halvings of 2012 and 2016, the price increased by a total of 5187 percent. Additionally, between the halving of 2016 and the subsequent year's all-time high, bitcoin's spot price climbed by 2922 percent. It can be said that halving events act as a catalyst for price increases both before and after the event. A fortiori, institutions are also interested in the upcoming event: MicroStrategy's (MSTR) acquisitions have risen to a total of 56 650 bitcoins this year, while in 2022 the company’s purchases amounted to a modest 8109 units. MSTR has been cyclically increasing its purchases towards the April's halving.