One year after Bitcoin’s halving event, which traditionally boosts prices, growth is the weakest recorded. Although Bitcoin has reached nearly $95,000, the percentage increase falls short of previous cycles, hampered by high-interest rates and macroeconomic uncertainty. Experts in the mining sector are also struggling with lower prices, high competition, and cautious investments, raising concerns about the industry’s viability going forward.
Bitcoin’s halving event, which occurs every four years, took place just a year ago by cutting miners’ rewards in half. Historically, these events trigger significant price surges within the following year. However, while Bitcoin did reach an all-time high recently, the price increase has been notably muted compared to previous cycles, disappointing some industry onlookers.
Data from Kaiko, a market analytics firm, suggests that despite Bitcoin nearing $95,000 – an increase of 49% since the halving – this performance is lacking in historical context. “This is the weakest post-halving performance on record in terms of percentage growth,” remarked Dessislava Aubert, Senior Analyst at Kaiko.
The current macroeconomic landscape plays a critical role. High-interest rates, the highest seen in years, combined with political uncertainties have made investors wary. Traditionally, Bitcoin flourishes in low-interest environments, similar to other risk assets such as stocks, but recent market trends are defying these norms.
Reflecting back, Bitcoin’s early years painted a different picture: before the first halving in 2012, it was priced at just $12.35, soaring to almost $964 in a mere year. Fast forward to the next halving in 2016, Bitcoin jumped from $663 to $2,500, and after the May 2020 halving, it skyrocketed to over $69,000.
This most recent halving reduced miner rewards from 6.25 BTC to 3.125 BTC per block, leading many to expect a corresponding price boost. Yet, Bitcoin’s current price is only about 50% higher than last year’s, leaving many puzzled, especially since analysts had predicted that both the halving and approval of spot Bitcoin ETFs would drive remarkable growth.
The disappointment isn’t limited to retail investors; miners are feeling squeezed too. Curtis Harris, from Compass Mining, pointed out the growing mining difficulties and how the lower Bitcoin prices force miners to divest coins to cover operational expenses. He rang a cautionary bell, noting that the competitive landscape has made surviving in the mining sector increasingly challenging.
Moreover, while historic political events like Trump’s presidency sent Bitcoin prices soaring, concerns over current economic policies have led to a partial recovery at best. Harris elaborated that rising borrowing costs are aggravating the situation for miners, further slowing new investments.
Even amidst the gloom, Compass Mining’s Chief Mining Officer, Shanon Squires, suggested that miners should have prepared for a tempered rally post-halving. He mentioned that miners who efficiently manage operations have stable profits, implying that unrealistic expectations could lead to disillusionment in a more economically turbulent environment.
