Be patient for big returns, bitcoin investors told… but its post-halving performance has dwarfed previous events in 2016 and 2012
- Bitcoin has just been through its third halving – which cuts the reward for mining
- This has previously caused the price to reach all-time highs
- Between 11 May when the halving happened and June it is up 14.7%
- In its last two halvings it went up 8.5% and 0.5% over the same period – are we set for a boom?
Bitcoin watchers have told investors who expect its price to boom on the back of its recent halving to be patient and not expect instant returns – despite the cryptocurrency rising more than 14 per cent in a month.
There was a surge in demand for it ahead of the event in early May, which has cut the reward for digitally mining bitcoin in half, making it harder to obtain in future, making it scarcer and potentially making existing coins more valuable.
Since 11 May, the price has steadily increased from just under £7,000, and hit a new post-halving high of £8,010 at the start of June.
It has slid a little since then but that rise still represents a healthy return of 14.7 per cent since the halving, compared to a 4.2 per cent rise in the US S&P 500 index over the same period.
Golden ticket? Bitcoin went up 14% between its May halving and the start of June but some think it could take a while before the price really takes off
Danny Scott, the chief executive of Isle of Man-based cryptocurrency exchange Coin Corner, who previously made the eye-catching prediction to This is Money that bitcoin could reach $1million within five years, said the halving was ‘not usually an instant impact event’.
He said: ‘It takes time for the supply and demand curve to take shape.
‘Looking back, we’ve typically seen bitcoin take between three to nine months after a halving event to reach the previous all-time high, which means, if history repeats itself, we can expect to see $20,000 – or £15,839 – anytime between August 2020 and February 2021.’
Investors who took a punt on bitcoin when it collapsed in price along with other assets in the big coronavirus-fuelled market crash in late February and March have already cashed in.
It hit a low of £3,900 a coin on 16 March and has since rebounded strongly. Scott added: ‘The second quarter has previously proved to be a strong quarter during bitcoin’s life, with only one of the last six years, 2018, resulting in a negative movement.
‘We are currently up around 53 per cent for the second three months 2020, and this is looking to be potentially one of the strongest of the last six years.’
While always unstable, Bitcoin has seen a steady increase in its price since 11 May
While last month saw bitcoin’s third halving since its inception, it is the first time it has taken place since the cryptocurrency has become a household name, with the two previous times occurring in…