The Bitcoin halving bull meme

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Qiao Wang - October 10, 2018

Lately there’s been renewed hype that “bitcoin will pump around halving events.”

This is a bad thesis.

The idea works something like this. The price of Bitcoin is highly volatile, so miners generally cash out after mining new blocks. However, every four years (every 210,000 blocks to be exact), Bitcoin’s block reward halves. Less reward means less cashing out, and as a result, the selling pressure from miners decreases. With less selling, the market faces a supply shock (demand is unchanged), and that leads to a price rally.

Moreover, charts like the one below get thrown around on Twitter and Telegram to support this. Indeed, the price of Bitcoin does seem to be substantially higher after the halvings on 11/28/2012 and 07/09/2016.