Bitcoin is unique in financial assets because it has a script that it follows every four years. A script in code, not in the board room. Miners' reward will be halved automatically, predictably and irreversibly. It is not a decision made by any central bank. It does not go to any committee for a vote. At block 210,000 every 210,000 blocks, it happens just as it has been all along.
That's known as the halving. It's created the most stable price trend in crypto history. It's an open question whether that's going to continue to be the case in future cycles, but it's a good starting point for any serious analysis to know what's happened in each cycle.
An explanation of the halving.
Bitcoin miners reward are newly created Bitcoin when miners validate a block of Bitcoin transactions. It was 50 BTC per block back at the time of Bitcoin's inception in 2009. Once it halves every 210,000 blocks (about every four years). This is where the name is derived from.
That's how the mechanism works – a maximum supply of 21 million Bitcoins was fixed into the protocol by Satoshi Nakamoto. This cap gets enforced over time through the halving, which means the rate of new coins entering circulation decreases gradually over time. The new successful miners now receive 3.125 BTC per block after the 2024 halving. Bitcoin's annual inflation rate was less than 1%. To compare, in recent years the inflation rate in the United States has been much higher.
The economic reasoning here is simple: When demand is unchanged or increased, and supply increases at a lower rate, the price should increase. Whether that logic works out tidily or not in practice is demonstrated by the four halvings.
First halving — November 28, 2012
The first halving occurred around the time of Bitcoin's $12 price tag. Block rewards have been reduced from 50 BTC to 25 BTC. The total value of all bitcoins ever created: $123 million. Now, not a misspelling, but a million.
The series that followed was the most volatile in 2017's Bitcoin saga. The price in 12 months went up from $12 to more than $1000. By the end of 2013, it briefly touched $1,150. This comes out to be an increase of approximately 8,858% over one year. It was reduced from 25.75% to 12%, and it was a huge supply shock to a still young market, hungry for new ideas and lacking a valuation system.
The ensuing crash was a violent one. Bitcoin had a 85% decline from peak to trough. It took a long time to recover. That trend was set; explosive rally, crushing correction, was to become the trend in every subsequent cycle.
Second halving — July 9, 2016
By the time Bitcoin hit 2016, it was nothing like the same. Developer ecosystem established. Initial interest among institutions building up. The block reward has been halved from 25 to 12.5 BTC. Price at the halving: around $650.
This cycle took longer to play out. The price actually decreased three months after the halving, as the market had priced in the halving somewhat. It wasn't until January 2017 that a new all-time high was reached. The real run started then. By December 2017, Bitcoin hit $19,665. From the halving price to the peak has been about 2900%. The 12-month return from halving, date: 294%.
The 2017 bull run also saw mainstream media at a level never before seen in the cryptocurrency space. The price was being monitored by CNBC. Your family were talking about it at Christmas Uncle.At Christmas dinner your family asked about it. Then more recently, in 2018, it fell 84% from its highs.
Third halving — May 11, 2020
The third halving occurred in the middle of a global pandemic. Block reward: 12.5 BTC to 6.25 BTC. At the point of a halving: approximately $8,727. The macro environment was also unusual as central banks were printing money at unprecedented rates and for the first time a narrative emerged that Bitcoin was a hedge against inflation amongst institutional investors.
MicroStrategy bought its first bitcoins in August of 2020. Paypal has just acquired the ability to buy cryptocurrencies. Grayscale's Bitcoin Trust began to get significant institutional capital. The nature of the cycle was different; it was not a retail speculation driven run, it was a corporate treasury and an institutional allocator driven run.
One year following the halving, Bitcoin was valued at $55,847 or 540% up. This ultimate rise took place in November, 2021, reaching $69,044. But then the FTX meltdown, the Luna crash, the macro tightening cycle — and Bitcoin has fallen by more than 75% from that point.
Fourth halving — April 19, 2024
It was not like the other one at the beginning. A new all-time high in the Bitcoin price was crowned in advance of the halving for the first time in the history of Bitcoin — $73,800 in March of 2024, coinciding with the start of spot BTC ETFs in January. In mere months, BlackRock's IBIT attracted billions of dollars in assets. The institutional framework, which had been developed since 2020, has now come to fruition.
The block reward was cut in half from 6.25 BTC to 3.125 BTC. Price at the halving: around $63,000. Annual inflation rate: lowest level for the first time in a year.
Historically, the performance since the halving has been weak. A year after the halving, the price of Bitcoin ranged from $80,000 to $90,000. The eventual cycle high came on October 6, 2025, at approximately $122,000–$126,000. The quote from the halving price to the peak is approximately 100%. Compare that to 291% in 2016, 541% in 2020, and 8,858% in 2012.
The worst halving result ever. And yet — Bitcoin went from $63,000 to over $120,000. The appreciation of 100% over a period of eighteen months is outstanding in any other investment class. Crypto changes the game in a way that skews perception.
The reason behind the difference in this cycle
There are several reasons why the performance was not as strong as it could have been. With pre-halving ATH, which has never been the case before, a substantial part of the expected post-halving value was already captured by ETF-based institutional buyers. Many of the "buy the news" trades had already occurred when the halving took place.
Uncertainty in macroeconomic conditions was also much greater than in previous cycles. Tensions in the global trade trade were again discussed at a very high level in Q1 2025 and sentiment was negative. In the six months after the 2024 halving, the Economic Policy Uncertainty Index averaged 317, whereas in 2020, the same time frame was 186 and in 2016 was 107.
And Bitcoin's volatility has structurally decreased. In 2012, it has seen prices change more than 200%, but today the volatility is less than 50%. Retail speculation moves differently than institutional capital. Steadier on the way up... and the way down. The blow-off tops that were previously seen in the cycles might no longer be seen in the same shape.
What will happen in 2028? The 2028 halving!
A third halving—around March/April 2028 when the block height is predicted to reach 1,050,000—is expected to take place at the same time. The reward will drop from 3.125 BTC to 1.5625 BTC. At that time, more than 95% of all Bitcoins will have been mined. The total number of Bitcoins that have yet to be issued is less than one million, to be mined in the next 100 years.
Diminishing returns is evident from the data. There is a smaller percentage increase with a larger base within each cycle. That's not the problem with the mechanism, it's what maturation is. A $1 trillion asset can not 10x as much as a $1 billion one.
But it remains uncertain whether the four-year cycle is the best way to approach the Bitcoin price is really the case. There is some institutional adoption which has altered the demand side of the equation and in a way that doesn't actually fit the previous cycles. The inflows of ETFs are no longer a one-off, but are now part of the market! The adoption of corporate treasury has brought an extra layer of demand which is not retail-driven.
The halving is still relevant: The new mining supply cut in half is a real event that has real economic impact. The "halving equals bull run equals 10x" story, however, is likely too easy to be true for this asset that has become Bitcoin. The pattern is authentic. It is decreasing in strength. Anyone who formulates his strategy based on cycle repetition alone is using a partial model.
The next halving is about 2 years in the future. Until the middle: a US economy more clearly defined than any in the past, a maturing ETF infrastructure, and an uncertain macro picture. The supply shock is going to occur. The actions of the market will be different.
