Why did Bitcoin plummet after the halving?

Bitcoin will plummet after the halving because: Speculation before the halving caused the price of Bitcoin to surge. The number of newly mined Bitcoins decreases after the halving, limiting market supply. The speculative bubble bursts and investors sell Bitcoin to recoup their costs. Other factors, such as regulatory uncertainty and competition, also affect price performance. Historical data shows that Bitcoin usually plummets significantly after halving: 60% in 2012, 70% in 2016, and 45% in 2020.

#Why did Bitcoin plummet after the halving?

Bitcoin halving, also known as “cutting,” refers to an event in which Bitcoin rewards are cut in half every four years. It aims to control the Bitcoin supply, ensuring it remains decentralized and scarce. However, historical data shows that Bitcoin typically plummets after a halving.

Halving sparks speculation and price surge

In the months leading up to the halving, the market is often filled with speculation and excitement in anticipation. This would cause Bitcoin prices to surge as investors rush to buy Bitcoin in anticipation of its post-halving appreciation.

Supply Reduction During Halving

After the halving, the number of newly mined Bitcoins is reduced by half. This limits market supply and increases demand for existing Bitcoins. However, while demand remains the same, this can lead to higher prices.

The price bubble bursts after the halving

After the halving, when the initial speculative bubble bursts, prices tend to drop significantly. This is because the market realizes that the supply of Bitcoin is not that scarce, and many investors who bought Bitcoin did so at a high price before the halving. When prices don’t live up to expectations after the halving, they tend to sell to recoup their costs.

Other factors

In addition to speculation and supply factors, other factors will also affect the price performance of Bitcoin after halving, such as:

• Regulatory uncertainty
• The emergence of new competitors
• Market sentiment

Historical data

Historical data It shows that Bitcoin usually plummets sharply after halving:

• 60% drop after 2012 halving
• 70% drop after 2016 halving
• Dropped 45% after the 2020 halving

Conclusion

The Bitcoin halving is an important event that affects the price. Pre-halving events typically trigger price spikes due to speculation, but reduced supply after the halving can cause bubbles to burst and plummet. There are other factors to consider, such as regulatory uncertainty and competition.

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