Bitcoin Halving Hype: Separating Fact from Fiction as Volatility Expectations Soar – Blockonomi

As the highly anticipated Bitcoin halving approaches, scheduled for April 20, 2024, the cryptocurrency community is abuzz with speculation about its potential impact on the market.


Greg Magadini, director of derivatives at Amberdata, believes that the Bitcoin halving is unlikely to cause a substantial volatility explosion.

How To Get Free Crypto  

In a recent newsletter, Magadini stated,

“From a qualitative perspective, I continue to believe paying a volatility premium for a highly predictable outcome (the BTC halving) isn’t worth a volatility event premium.”

He argues that the impact of Bitcoin’s reward halving on its native cryptocurrency and miners has been well documented over the years, leaving little room for a surprising outcome.

Despite Magadini’s skepticism, options implied volatility has ticked higher in the run-up to the halving, suggesting increased price turbulence in the days surrounding the event.

However, he points out that recent major crypto events, such as Ethereum’s Dencun upgrade, Shanghai upgrade, and spot BTC listings, had disappointing implied volatility buyers when realized volatility failed to materialize by large margins.

While the halving may not lead to immediate volatility, its impact on mining costs and profitability is significant. According to data from CryptoQuant CEO Ki Young Ju, the current cost of mining using Antminer S19 XPs will rise from $40,000 to $80,000 after the halving.

Coinbase Banner  

For miners to remain profitable and continue their operations, the BTC price must rise above $80,000 post-halving. Historically, BTC prices have seen multifold jumps following each halving, with the price increasing by 9,000% after the 2012 halving, 4,200% after the 2016 halving, and 683% after the 2020 halving.

However, it is crucial to note that while halvings are generally considered bullish for Bitcoin, historical data shows that BTC often experiences significant crashes within a year following each halving event.

These crashes have seen Bitcoin’s price drop by more than 80% on average. The first halving in 2012 led to an 85% drop in 2013, the second halving in 2016 saw an 84% decline in 2018, and the third halving in 2020 was followed by a 77% correction in 2022.

Profit-taking by investors and the “mining capitulation” phenomenon are believed to be among the factors contributing to these post-halving crashes. Despite these cyclical corrections, Bitcoin has consistently demonstrated its resilience and ability to recover from significant drawdowns.

FreeBitcoin Banner  

As MicroStrategy founder and chairman Michael Saylor stated,

“If you’re going to invest in Bitcoin, a short time horizon is four years, a medium time horizon is ten years. The right time horizon is forever.”

As the fourth Bitcoin halving approaches, with the price having recently reclaimed $71,000, investors and enthusiasts eagerly anticipate the potential implications.

While history suggests a post-halving correction may be on the horizon next year, the circumstances today differ from any of the previous events that affected Bitcoin as an asset. With clearer regulations, substantial institutional investment, and a stronger network than ever, the cryptocurrency community remains hopeful for Bitcoin’s long-term prospects.

Go to Source
Author: Oliver Dale

Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

You May Also Like

More From Author

This site uses Akismet to reduce spam. Learn how your comment data is processed.