Bitcoin halvings - slashing rewards and generating FOMO since 2012. So many "bubble bursting" predictions, so little accuracy.
Co-author: Ivan Cryptoslav
Bitcoin's block reward halves every 210,000 blocks or approximately every four years. This orderly reduction of Bitcoin's inflation rate is known as the "halving", generating endless predictions of bursting bubbles from no-coiner skeptics.
The next halving is coming up on April 17, 2024 (estimated), when the block reward will decrease from 6.25 BTC to 3.125 BTC.
Track it down on our Bitcoin Halving Countdown page!
But let's rewind for a moment, and take a quick trip down memory lane to Bitcoin's first halving back in 2012. Chances are, you barely knew what crypto was back then.
This article explores each of Bitcoin's previous three halvings. We'll look at how Bitcoin's price reacted around each event, as well as analyze the "Bitcoin is dead" narratives that spiked around these times despite ultimate recovery.
Using data from 99Bitcoins’ Bitcoin Obituary page, which tracks predictions made by notable figures and popular publications of Bitcoin's demise, we will analyze when these misguided pessimistic takes peaked in relation to the halvings and the bull runs that followed. This sheds light on the cycles of FUD and baseless criticism that have surrounded Bitcoin throughout its history.
Let’s dive in!
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Nov. 28, 2012: First Slice
The first Bitcoin halving sliced off the first 50% of the Bitcoin mining reward – from 50 to 25 Bitcoins per block. Back then, the impact of the halving was still not priced in. The community was watching anxiously, as the closing price on the halving day was $12.20.
Source: Bitcoin Price Page
In the months after the first halving in 2012, the network hash rate and difficulty declined as less profitable miners turned off machines to reduce costs. However, by early 2013, Bitcoin kicked off its first major bull run, surging from $13 to ~ $1,000 by year's end.
The fears of miner capitulations were proven largely unfounded. The network hummed along, and the Bitcoin community learned an early lesson: Halvings are bullish for the Bitcoin network and the price of Bitcoin.
Total Bitcoin supply on Nov. 28, 2012: 10,500,000
Closing price on halving day: $12.20
Examining the "Bitcoin Is Dead" Narrative Around the First Halving
Source: 99Bitcoins
Prior to the halving, there were only a few scattered articles criticizing Bitcoin's viability, from December 2010 - November 2012. These likely reflected skepticism about Bitcoin's volatility and lack of mainstream adoption.
In the months right before the halving (September - October 2012), there were no critical articles. The price remained relatively stable around $10-15.
Source: 99Bitcoins
The critical narrative started growing in April 2013, with three very negative articles about Bitcoin's future with Slate calling Bitcoin Fool’s Gold and Chron explaining why Bitcoin is doomed to fail. This coincided with the first major price surge peaking at $213. The volatility likely renewed skepticism.
The negative narrative peaked in March 2014 as BTC fell from the heights of $1,132 to $555. About seven critical articles were posted by popular sites questioning Bitcoin's viability.
Throughout 2014, there were periodic spikes in critical articles during times of price swings or crashes. One of the events that spiked the frequency of these articles was the closure of Mt. Gox, an exchange that was handling 70% of all BTC transactions worldwide.
By late 2014, even with volatility, the negative narrative slowed with only eight critical articles between April - November 2014. This suggests growing mainstream adoption was damping skepticism.
What If You Invested $100 in Bitcoin During the First Halving?
If one had the foresight to invest just $100 in Bitcoin on November 28, 2012 (the date of the first halving), that investment would be worth a staggering $1,629,387 as of September 14, 2023, with Bitcoin priced at $26,293.87. In other words, a simple $100 investment would have returned over $1.6 million in profit in just over 10 years.
Driven by the built-in supply shocks from Bitcoin's quadrennial halvings, as well as accelerating mainstream adoption, Bitcoin has rewarded its earliest investors with what is likely the greatest investment return in modern history. It all started with the first halving in 2012, which brought the first wave of significant price appreciation and set the stage for the tremendous gains that were to come.
July 9, 2016: Bracing for a Boom
The second halving reduced the block reward by another 50% – from 25 to 12.5 BTC. The community anticipated another bull run driven by the halving, as the memories of 2012 were still fresh. Many predicted a price boom. However, some warned that a smaller mining reward could depress mining profits and harm the network
We all know what happened next…
Source: CMC Bitcoin Price Page
Bitcoin had an incredible bull run in 2017. Its price went up to nearly $20,000 by the end of the year, and this was the first time cryptocurrencies were in the global limelight. That set the stage for an even bigger bull run four years down the road…
Total Bitcoin supply on July 9, 2016: 15,750,000
Closing price on halving day: $640.56
Examining the "Bitcoin Is Dead" Narrative Around the Second Halving
As the second halving approached, the negative narrative started to grow. From December 2014 to July 2016, there were periodic spikes in negative articles about Bitcoin's future, particularly during price swings or crashes. Some of the highlights include:
- In December 2014, six highly negative articles were produced by popular publications, two of which questioned Bitcoin's viability.
- In January 2015, 14 articles were posted, most of them calling it “the end of Bitcoin” (we know how that turned out!)
- In March 2015, an article alarmed that Bitcoin was going to disappear, while the Financial Times confidently predicted that the chances of Bitcoin (or crypto in general) becoming a mainstream currency were zero (PayPal says Hi from 2023)
“There is no government that's going to put up with it (Bitcoin) for long,” said Jamie Dimon, the CEO of JPMorgan Chase, as reported by a Coindesk article in November 2015.
We would like to invite Jamie Dimon to read this article: The Most Crypto-Friendly Countries in 2022
In the months leading up to the second halving (November 2015 - July 2016), there were several negative articles published.
After the halving on July 9, 2016, there was a noticeable decrease in negative articles about Bitcoin's future. However, in November 2016, several critical pieces surfaced, including “Bitcoin was supposed to change the world. What happened?” by Vox.
In addition to that, on November 17, 2016, Circle’s CEO told CoinJournal, “It’s highly unlikely that any of us will be using Bitcoin in five or ten years. In the same way that — how many of us use NCSA Mosaic or Netscape Navigator?”
Boy, was he wrong!
The periods of heightened criticism tended to correlate with major price swings and crashes. Bitcoin went through exceptional volatility during this period as it grew from a niche experiment to a more mainstream asset class.
In addition, high-profile exchange hacks, controversies around scaling solutions, and uncertainties around regulation created challenges for Bitcoin. Incidents like the Mt. Gox hack and the debate over SegWit and hard forks raised questions about Bitcoin's security, governance and ability to evolve efficiently.
The rapid emergence of new competing cryptocurrencies like Ethereum also challenged the notion that Bitcoin would remain the dominant coin. The rise of altcoins and tokens highlighted Bitcoin's perceived limitations and fueled debates over its long-term value.
What If You Invested $100 in Bitcoin During the Second Halving?
If you had invested $100 in Bitcoin on July 9th, 2016 - the day of the second halving - your investment would now be worth around $4,000.
The price of Bitcoin on that day was $640.56. At today's price of $26,293, the 0.1555 BTC that $100 would have purchased then would now be worth about $4,092 - a return of over 40x your initial investment.
May 11, 2020: One Million More
The third halving halved the mining reward again. So predictable, yet so ground-breaking. With the mining reward slashed to 6.25 BTC per block, Bitcoin was getting ready for another bull run.
Source: Bitcoin Price Page
Speculation abounded about growing institutional adoption and Bitcoin as a hedge for inflation. After the halving, the price of Bitcoin surged once again. The community was ready by this time – they had learned the lesson already. Halving day was eagerly anticipated but the real celebrations did not kick off until the incredible bull run in 2021.
Many anticipate history will repeat itself in 2024.
But, will it?
Total Bitcoin supply on May 11, 2020: 18,375,000
Closing price on halving day: $8,605.03
Examining the "Bitcoin Is Dead" Narrative Around the Third Halving
After the halving, the negative narrative started growing as Bitcoin became more mainstream. However, the most vocal skepticism seemed to come from economists, academics, and old-guard financiers.
Source: 99Bitcoins
In August 2017, there were several articles predicting Bitcoin's demise and calling it a bubble. This coincided with the price surge that took Bitcoin from ~$1,000 to ~$20k. The volatility likely renewed skepticism.
The critical narrative hit a peak in December 2017 as the price skyrocketed. There were around 33 very bearish articles from popular publications that month calling Bitcoin a hoax or a bubble. The dramatic price increase brought immense media attention and skepticism.
Source: 99Bitcoins
Throughout 2018, there were periodic spikes in critical articles during major price declines. The frequency of Bitcoin obituary articles peaked in November - December 2018, when the price plunged below $4,000. At this point, the viability concerns were driven more by volatility than an increase in attention.
In 2019 and 2020, the volume of critical articles diminished overall but maintained spikes around price swings. This suggests that, despite lingering skepticism, Bitcoin was continuing to gain mainstream traction and adoption.
By 2021, there was another huge surge of critical articles as BTC approached $60,000. However, the volume and frequency of these bearish predictions started declining through the latter half of 2021. This potentially signals that the cryptocurrency was finally moving past the "fad" phase in the eyes of mainstream finance.
What If You Invested $100 in Bitcoin During the Third Halving?
Had one decided to invest $100 in Bitcoin on May 11, 2020, when the price sat at $8,605, that investment would now be valued at $3,054, as of September 14, 2023. In other words, a $100 investment in Bitcoin when the price was under $10,000 just over three years ago would have already gained over $2,954 in profit (about 29 times the original investment).
2024 and Beyond
The next halving, who would’ve guessed it, will reduce the mining reward again – to 3.125 BTC per block. The Bitcoin community is eagerly anticipating this milestone. It will make Bitcoin’s supply even scarcer and, hopefully, introduce a new bull market.
Bitcoin’s built-in halvings stand out as a unique feature that adds predictable control over its supply issuance. Other cryptocurrencies have tried to copy its model, but no other blockchain has had the same success with halvings and inflation reductions as Bitcoin.
Of course, some critics have argued that halvings are unnecessary, and Bitcoin’s supply could have simply been capped at 21 million with all units released immediately. But Satoshi wisely recognized the importance of gradual, rule-based issuance and its role in increasing adoption and fairness. Bitcoin would not be where it is today without halvings.
Halvings also forge links between each generation of Bitcoin users. Those who participated in 2012’s first halving have watched the community grow and pass new milestones. And those who joined post-2020 look to earlier halvings for context on Bitcoin’s roots. Halvings remind the community of how far we've come, and where we have yet to go.
Examining the "Bitcoin Is Dead" Narrative Around the Fourth Halving
The spike in negative sentiment seen in December 2021 came on the heels of sizable corrections in the prices of Bitcoin and other major cryptocurrencies earlier that year. While Bitcoin rebounded back above $45,000 by December, the negative pieces that emerged likely reflected growing unease about crypto's volatility.
The fear only intensified in 2022, as major players in the web3 space began to falter. In June 2022, when the narrative exploded with notable figures and popular publications declaring Bitcoin dead and ponzi, the crypto market was in a state of extreme fear. Earlier that month, crypto lender, Celsius Network, froze withdrawals, and the Terra ecosystem imploded (May 2022), wiping out billions in market value.
The rash of negative coverage in June coincided directly with Bitcoin plummeting below $20,000 for the first time since 2020. The media pile-on effect likely exacerbated the selling pressure.
In September 2022 when Bitcoin tested below $19,000 again, two more Bitcoin obituaries from popular publications emerged. This drop came in the wake of further crypto failures, including the bankruptcies of Three Arrows Capital and Voyager Digital.
While the market stabilized through the remainder of 2022, concerns continued to mount around institutional crypto exposure. This came to a head in November with the stunning collapse of FTX, which fueled another wave of pessimism and doubts about crypto's viability.
In summary, the periodic spikes in "Bitcoin is dead" media coverage appear highly correlated to market sell-offs and major crypto failures.
As we move closer to the 2024 halving, the big question is whether renewed bullishness around the halving can overcome the repeated blows to market psychology. However, if mainstream adoption continues growing, the impact of negative media coverage may lessen over time.
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