The Impact of Bitcoin’s Fourth Mining Reward Halving: 100 Days Later

As the crypto community reflects on Republican presidential candidate Donald Trump’s recent appearance at the Nashville Bitcoin conference, another significant milestone approaches: July 29 marks the 100th day since the Bitcoin blockchain underwent its fourth mining reward halving. This event is pivotal for Bitcoin enthusiasts and investors alike, as it historically has a bullish impact on the market.

According to new research conducted by the ETC Group, the effects of this halving-driven slowdown in Bitcoin’s (BTC) supply expansion tend to manifest prominently after the first 100 days. The Bitcoin mining reward halving is a fundamental feature coded into the Bitcoin protocol, occurring every four years or after 210,000 blocks have been mined. This scheduled event reduces the reward miners receive for validating transactions by half, a process aimed at controlling Bitcoin’s supply and ensuring its scarcity over time.

Unlike fiat currencies, which are subject to perpetual inflation and increased supply, Bitcoin’s issuance is capped at 21 million coins. The halving mechanism plays a crucial role in regulating the pace at which this limit is approached. The inaugural halving took place in 2012, reducing the per-block reward from 50 BTC to 25 BTC. Subsequent halvings further decreased the reward, first to 12.5 BTC in 2016 and then to 6.25 BTC in 2020. Most recently, the halving on April 20, 2024, slashed the reward down to 3.125 BTC.

The previous halvings have historically led to substantial price rallies, with the majority of gains typically realized after the initial 100 days following the event. As Andre Dragosch, head of research at ETC Group, noted on X, “Today marks exactly 100 days after the Bitcoin Halving event on April 20. While the market often has a short memory, the supply deficit induced by the halving should begin to take effect now.”

Dragosch’s insights are derived from analyzing performance data surrounding the previous three halvings in 2012, 2016, and 2020. His study revealed that the mean excess performance—defined as the difference between performance X number of days post-halving versus X days prior—shows a significant increase starting 100 days after the halving, reaching a statistically meaningful level with T-values surpassing 2%.

The T-value is a crucial statistic used in hypothesis testing, helping to determine how far the sample mean deviates from the population mean, taking into account the variability within the sample. Dragosch emphasized, “The key takeaway is that 100 days after the Halving, the performance difference becomes statistically significant (T-value > 2) and continues to become increasingly significant until around 400 days post-Halving.”

The accompanying chart illustrates that the mean excess performance climbs above 100% starting from the 100th day after the halving, ultimately peaking at four-figure percentages. As history has shown, it remains to be seen whether these trends will repeat themselves in the current market environment.