🔥BTC Halving Analysis🔥
An overview in to Bitcoin halving and analyzing its effect
In Bitcoin halving, the reward for bitcoin mining is halved and takes place every four years. The halving policy was built into the Bitcoin mining algorithm to counter inflation by maintaining scarcity.
By halving the rate at which new BTC enters the market, the available supply is effectively reduced. If supply decreases and demand remains constant or increases, the price of Bitcoin should increase according to basic economic principles.
Supply pressures will be exacerbated by an upcoming "halving" in 2024, a pre-programmed event that will reduce the supply of Bitcoin rewards available to miners from about 900 per day to about 450.
Here I would like to do an investigation on Bitcoin halving and dig deep into the last halving on May 11, 2020 to see the impact on BTC transactions, fees, blocks, etc. and also review these parameters on Ethereum for wrapped BTC as well... So Stay with me!
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Ok, let's analyze the On-chain parameters first... Here I compare monthly block counts, transaction count, fee, average transaction per block, average difficulty, miner reward and hash rate with block reward changes (halving) from early 0f 2009 until now.
As you can see, there have been three halvings so far: Nov 28, 2012 (50 to 25), July 9, 2016 (25 to 12.5) and May 11, 2020 (12.5 to 6.25) and the next halving is expected to take place in April 2024, reducing the block reward from 6.25 to 3.125 BTC per block.
Examination of the above chart leads to theses conclusion:
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There is no significant change in monthly block counts in the pre-halving periods.
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The number of monthly transactions increases in all three halving periods and the number of transactions per block increases in the same way.
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The total monthly fee increases in the first two halving periods, but in the last halving period the game changes and we see a 60 percent decrease after May 2020.
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For the average monthly difficulty, we see the same play, with the third halving leading to a decrease in difficulty (as opposed to the last two halvings, in which the difficulty increased).
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In the miners' total monthly reward, there is a super nice event! If we compare the miners' total reward before and after the halvings, we see that there is a 50.4% drop in the first halving (predictable according to HALVing!), but wait! does this 50% drop apply to all halvings? well... if we check for the second and third bisections, we see 36% and 25.3%, respectively, which means that the dependence of miners' reward on bisection has decreased over time... but why? maybe in the next BTC dashboards =)
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Analyzing the hash rate, we see that it increased after the first and second halving, but decreased after the third!
After these conclusions, we understand that the third half was different! So let's focus in it, May 11, 2020 halving
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From the analysis of the May 11, 2020 halving, we can conclude:
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The halving has no significant impact on the number of hourly transactions, the number of transactions per block, and the number of active users.
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On the other hand, we see an increase in the total hourly transaction fee after the halving (considering that the transaction number has almost not changed, we can conclude that the transaction fee has increased here)
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Checking the hash rate also shows a slight increase compared to the period before the halving.
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Miner rewards have decreased (predictably!).
On the BTC, ETH, Block Reward chart I said that there is a significant correlation between ETH and BTC and as we saw there and see here again, BTC price started to fall three days before the halving (13%) and rise again 7 days after the halving reach that price again...
let's check if this pattern is the same for altcoins or not:
ETH (rank 2 based on historical marketcap): the price started to fall from $214 three days before the halving to $183 at the time of the halving (about 14.4% decrease) and reached $214 again after 7 days (same as BTC)
LINK (rank 11 based on historical marketcap): price started to fall from $4.12 two days before halving to $3.5 at the time of halving (about 15% decrease) and did not reach this price again after 8 days.
MKR (ranked 31 based on historical marketcap): the price dropped from $338 two days before the halving to $317 at the halving (about 6% drop) and reached $338 again after 6 days.
LEO (ranked 14th based on historical marketcap): The price did not change significantly before and after the halving.
CRO (rank 15 based on historical marketcap): the price dropped from $0.068 two days before the halving to $0.063 at the halving time (about 7.3% decrease) and reached $0.068 again after 6 days.
HEX (ranked 19th based on historical marketcap): The price started to fall before the halving, but reached the peak price before the halving started.
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Theoretically, the halving means a reduction in supply, which should result in a price increase. Did this happen and if so, how?
Review BTC price before and after the halving shows us:
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Three days before halving a price downtrend was started and lower BTC price by 13%, but after halving a slight uptrend started and after 7 days BTC price reached 10K again (3 days before halving price) so we can't say halving cause a true price increase here but it was a good opportunity for oscillating.
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Adding the ETH chart to the BTC chart (ETH price 10x for a better view), we can see the impact of the halving on other coins. If we analyze this chart, we can see a strong correlation between BTC and ETH price, so we can say that what happened to BTC happened to altcoins! but wait! let's go deeper (follow the dashboard)
This dashboard is written by me! Mrfti!
You can find me on twitter: https://twitter.com/Mrfti_plus
and discord: mrfti#
Note: all information and analysis published here is my own idea, please always DYOR
Note: all images used in this dashboard were created by Midjourney
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