Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving

Bitcoin is eyeing a price breakout after clearing $38,200 earlier today, reaching its highest point in 17 months.

That puts bitcoin up 130% this year, far more than almost all other top-25 cryptocurrencies.

BTC only trails bitcoin cash (BCH), chainlink (LINK) and solana (SOL), which were up 133%, 163% and 508%, respectively, as of 5am ET.

For scale, bitcoin’s year-to-date gains are in line with Tesla stock and double Intel and Microsoft. 

Chipmaker Nvidia is meanwhile up more than 230% on the back of artificial intelligence hype, which made it the ninth company in history to reach trillion-dollar market value. Crypto’s overall market cap is now close to $1.5 trillion, with bitcoin making up more than half of that total.

Nailing down the exact catalyst for bitcoin’s recent growth is difficult, however. 

The pending suite of applications for spot bitcoin ETFs from Wall Street mega giant BlackRock and nearly a dozen other firms is one theory. “Spot bitcoin” means they’ll have to actually buy bitcoin when they issue new shares to meet investor demand, which may or may not pick up, depending on which analyst you ask.

Bitcoin indeed jumped by nearly a quarter — from $25,500 to $31,500 — days after BlackRock filed in June. Low liquidity led BTC to quickly drop, and by the middle of August had practically given up all those gains.

BTC has popped by half since then. Almost all of that came directly after a fake news headline suggested that BlackRock’s application had been approved (it hasn’t). 

One month later, a phony story about an XRP ETF briefly pumped the fifth-largest crypto by 10%. XRP immediately corrected once the news was debunked. 

Bitcoin price is correlating with 2012 halving

Markets are clearly ready to bounce on any good news — like the upcoming halving. 

Sometime around April 19, 2024, Bitcoin miners will suddenly earn 50% fewer coins for each block they find, dropping from 6.25 BTC ($238,000) to 3,125 BTC ($119,000).

Bitcoin’s next halving will be its fourth ever. To some, halvings are magic: Previous events — in 2012, 2016 and 2020 — all preceded monumental bull markets.

At one year after each halving, Bitcoin had rallied:

• 8,900% after its first halving ($12 to $1,100).
• 285% after its second ($670 to $2,500).
• 540% after its third ($8,700 to $55,900).

Bitcoin even went up in the 200 days leading up to all three occasions — so no matter how you cut it, BTC’s price has gone up around halvings. 

This time around is even somewhat unique: demand could go up due to a spot ETF just as supply is slashed in half.

Still, buying bitcoin around the halvings is much like buying the rumor with no intention to sell the news. The sample size is incredibly small, leaving little room for reliable analysis of how the halving in April might impact bitcoin’s price.

Bitcoin miners, no doubt, hope the next halving mirrors the others. Axing issuance is expected to crush their profit margins, especially those without extremely cheap access to power (or even their own power stations). 

Recent estimates suggest the most efficient bitcoin miners pay $15,100 to mine each coin. That number doubles after the halving, “which would likely put the majority of the mining market into severe income stress,” according to data unit Glassnode. 

All this means bitcoin had better stay above $30,000 after the next halving, which is 141 days away. So far, so good.

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.
• Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.