Bitcoin, the most popular cryptocurrency, consistently attracts the attention of investors due to its powerful price increases. One of the main factors driving this upward trend is the Bitcoin halving event, which reduces the block reward for miners by half. Let’s explore why this event has such a profound impact on Bitcoin’s value.
1. History of bitcoin price increases
Bitcoin has gone through three major price cycles since its inception, marking key milestones in the history of cryptocurrency finance. These cycles not only reflect Bitcoin’s growth but also mirror market sentiment and global economic factors.
1.1. The first price increase (2013 – 2015)
Bitcoin first entered a major price increase cycle in 2013, when its value surpassed the 1,000 USD mark, a milestone never before seen in cryptocurrency history. In December 2013, Bitcoin reached its peak at 1,150 USD, marking a period of explosive growth.
However, the market quickly reversed. By January 2015, Bitcoin’s price sharply declined, hitting a low of 171 USD, a drop of 85% from the previous high.
If you had invested 100 USD in Bitcoin at this lowest point, your investment would be worth over 200,000 USD today—demonstrating Bitcoin’s long-term growth potential.
1.2. The second price cycle (2016 – 2018)
Bitcoin entered its second price increase cycle in the second half of 2016, with strong growth momentum continuing throughout 2017. This cycle peaked in December 2017 when Bitcoin reached its all-time high at the time: 19,900 USD.
After the peak, the market followed the familiar pattern of price decline. Bitcoin lost momentum and reached its low in December 2018 at 3,200 USD, an 84% drop from the peak.
What’s noteworthy is the similarity between the two price cycles (2013 and 2017):
- Time to reach the bottom: About 1 year after the peak.
- The decline from peak to bottom: Nearly identical, around 85%.
1.3. The third price increase (2020 – 2022)
The third major price surge of Bitcoin began in 2020 and peaked in November 2021 with an all-time high of $68,770. Once again, the period from the 2017 cycle peak to the 2021 peak lasted nearly four years, reinforcing the cyclical nature of the Bitcoin market.
After the peak, Bitcoin continued to decline and reached its bottom in November 2022 at $15,600, representing a 77% drop from the 2021 peak. Although this decline was less severe compared to the previous two cycles, it still highlights the market’s high volatility.
1.4. Future predictions
Nevertheless, history has shown that each deep correction opens up opportunities for long-term growth. For long-term investors, Bitcoin remains a promising choice, especially as it continues to assert its role as a store of value and a leading investment tool.
2. When will the next cryptocurrency price increase happen?
Cryptocurrency, especially Bitcoin, always piques the curiosity of investors about the timing of new price surges. Based on history, a Bitcoin price cycle typically lasts around 4 years, with a period of rapid acceleration often occurring after a halving event (block reward reduction). If this pattern continues, we can expect the next Bitcoin price surge to begin around 2024 and peak by the end of 2025.
Currently, several factors such as the upcoming halving event in 2025, the increasing interest from major financial institutions, and regulatory policies could significantly impact Bitcoin’s price. If you are considering investing, always stay updated on market developments and be prepared for sudden fluctuations.
However, it is important to note that Bitcoin has only been around for just over a decade, so the available data is still relatively limited. This means that market predictions carry significant risks, as the cryptocurrency market can change rapidly and may not follow any established patterns.
3. Factors driving cryptocurrency price increases
3.1. Bitcoin halving
Bitcoin halving is an important event programmed into Bitcoin’s protocol, occurring approximately every 4 years. When this event happens, the block reward for Bitcoin miners is reduced by half. This means that the amount of new Bitcoin issued to the market will decrease, which helps reduce supply and increase the potential to drive up the currency’s value.
Currently, the block reward is 3.125 BTC, and after the next halving event, this figure will drop to 1.5625 BTC. The next Bitcoin halving event is expected to occur in March 2028; however, the exact date and time may vary depending on the mining rate in the Bitcoin network. It will certainly fall within the first half of 2028.
Bitcoin halving is not just a technical event but also a crucial factor that strongly influences Bitcoin’s value. With a history proving the correlation between halving and price cycles, investors may view this as an opportunity to shape their long-term investment strategies. However, it is important to remember that the cryptocurrency market is highly volatile, and predictions should be carefully assessed along with other factors such as the economic context and legal policies.
3.2. Improvements in ethereum’s scalability and ethereum’s three halvings
Ethereum, the second-largest blockchain project after Bitcoin, has solidified its position as the leading smart contract platform. While Bitcoin primarily focuses on its role as a peer-to-peer currency, Ethereum has opened up a rich ecosystem of decentralized applications (DApps), from NFTs to decentralized finance (DeFi) protocols. However, for Ethereum to achieve mainstream adoption, it must address two major challenges: scalability and the deflationary pressure on ETH supply.
Scalability has always been Ethereum’s biggest bottleneck. As the demand for on-chain transactions increases, transaction costs also soar, creating difficulties for users. This was particularly evident during the 2021 cryptocurrency price surge, when average transaction fees on Ethereum exceeded $50.
Although the current bear market has caused transaction fees to drop, if the demand for Ethereum usage rises again, this issue will resurface. To address this, the Ethereum community has implemented several scalability improvement solutions, including:
- Layer 1: Direct upgrades to the Ethereum mainnet.
- Layer 2: Scalability solutions such as Optimism, Arbitrum, and Polygon zkEVM, which allow for faster and cheaper transactions while still leveraging the security of the mainnet.
The advancements in Layer 2 are particularly promising, helping to offload the mainnet and provide a better user experience. Once scalability reaches optimal levels, Ethereum could serve as an ideal platform for the next cryptocurrency growth wave, especially if a “killer app” emerges that attracts a large user base.
Unlike Bitcoin, Ethereum does not have the traditional halving mechanism. Instead, “Three Ethereum Halvings” refers to deflationary factors affecting ETH supply, including:
- Reduced ETH issuance after the transition to Proof-of-Stake (PoS)
- EIP-1559 (transaction fee burning)
- ETH staking
4. What happens when cryptocurrency prices increase?
Cryptocurrencies like Bitcoin are still considered risky assets due to their high price volatility. In a high-interest-rate environment, investors may shift to safer assets, reducing interest in cryptocurrencies. However, Bitcoin can still attract investors due to characteristics such as immunity to government monetary policies and its global nature.
Although the economy may face a mild recession, Bitcoin is still expected to reach higher price levels in the future. Well-known investors like Jesse Powell and Mike Novogratz believe that Bitcoin could reach 1 million USD due to these unique attributes.
Bitcoin halving is a crucial factor in creating scarcity and stimulating demand in the market. While history has shown the positive impact of halving, investors must always monitor other factors to have an appropriate strategy. Be prepared for significant volatility in Bitcoin’s future.
