Four Years On: Revisiting the Bitcoin Halving

To escape reality, I disappeared into the physical world for a month, hence delaying work, postponing replies, missing discussions. Please forgive me. Facing reality, I’m back in the digital world now, actively repaying my debts. Below is my first installment.

Four years ago, in my Ming Pao column ‘chungkin Express’, I discussed the Bitcoin halving in an article titled ‘Bitcoin’s Third Halving: Buy, Buy, Buy’. Advocating for readers to buy from the perspectives of participation, learning, and flexible purchasing limits. Rereading the article, it’s concise and to the point, thankfully solidly written without any mistakes or misleading readers. From the participation and learning perspectives, buying into and understanding Bitcoin four years ago means even if you’re not an expert now, at the very least, you’re not a novice. From an investment perspective, when the price was close to $10,000 USD, the current price is close to seven times that, which doesn’t qualify as foolish no matter how you look at it.

Fast forward four years, let’s revisit this topic, look at the latest data, and discuss recent developments.

Where do we stand in History?

We often hear about Bitcoin halving, which refers not to the existing quantity or price, but rather to the production. If Bitcoin is likened to fiat currency, it means the issuance rate is halved; if compared to gold, it means the amount of gold mined per day is reduced by half.

Compared to flat currency, where the supply can change unpredictably due to economic conditions, geopolitical factors, political changes, pandemics and wars, Bitcoin’s supply has been set on a schedule since January 3, 2009, the day of its genesis block. It started with adding 50 new bitcoins per block, halving the total supply every four years. This process repeats until 2140 when all bitcoins will have been mined, totaling 21 million.

Source: Kraken

To simplify, most of the above are approximate figures. Every four years is an ideal number in design, but in practice, there are deviations. For example, between the 3rd and 4th halvings, there is actually a gap of 3 years, 11 months, and 8 days, so overall, it has been approximately 8 months faster over the past dozen years. Since four years is an approximate figure, the year 2140 is just an estimate. However, regardless, unless there are significant advances in medicine or human cryogenic technology, we are destined not to witness 100% of Bitcoin’s production. Another interesting fact is that the final output of Bitcoin is also an approximate figure, with the accurate number slightly lower, at 20,999,999.9769.

As for the price, the historical price of Bitcoin against the US dollar is highly correlated with halving events. After each of the first three halvings, the price reached new highs in the following year, with price increases of 92 times, 29 times, and 7 times respectively compared to the halving price. The bull and bear cycles also consistently lasted around four years.


From one perspective, with four halving cycles, 50%+25%+12.5%+6.25%=93.75% of Bitcoin has already been mined, and the price has risen from 0 to briefly surpass 73,000 USD. Joining now may seem late. However, from another perspective, the number of Bitcoin holders relative to the world population is still a minority, and the total market value has not yet exceeded that of major companies like Microsoft, Apple, Google, Amazon, NVIDIA, etc. To grow to the scale of gold as a classic store of value, it needs to increase by 12 times. The potential for growth is enormous. Moreover, Bitcoin has only been around for a little over 15 years, and mining will continue for over 100 years. Compared to gold with a development history of thousands of years, it’s still early to get involved now.

Will history repeat itself?

source: coinmarketcap

Don’t get it twisted: the Bitcoin historical price chart above doesn’t have a linear Y-axis. If presented linearly, either the early price changes would be indiscernible, or the Y-axis would be excessively long. Using the logarithmic value of prices as the Y-axis can transform the chart into a readable linear relationship. In other words, Bitcoin’s price has experienced exponential growth over the past 15 years, making the incentive to buy Bitcoin extremely high based solely on historical data.

However, please note that correlation does not imply causation. A classic counterexample is that wearing one shoe to bed and waking up with a headache are highly correlated, but it doesn’t prove that the former causes the latter. Common sense tells us it’s just because of drinking too much and forgetting to take off the shoe, leading to the headache.

The bull and bear cycles of Bitcoin are similar. Although we have complete data from four halving cycles, we cannot exclude other factors affecting price fluctuations besides supply halving, such as the U.S. presidential election cycle (which usually also affects interest rate cycles). In fact, some argue that Bitcoin was designed to halve every four years to coincide with the U.S. election cycle. Coincidentally, the Bitcoin white paper was issued in 2008, the year of the Lehman Brothers bankruptcy and the election of President Obama. “Change,” as Obama said in his campaign speech, thus gave birth to Bitcoin (just kidding).

Furthermore, historical experience is insufficient to predict future events. A tragic example is that the little chick had rice to eat every morning for a month, but on the 31st morning, it was slaughtered. While this example is somewhat extreme, in the context of Bitcoin, the key lies in changes in the surrounding environment. Will these changes prevent history from repeating itself in cycles? In fact, prior to the fourth halving, Bitcoin against the USD had already broken through historical highs, unlike previous cycles where new highs were achieved over a year after the halving. This indicates that the cycle is already changing; it’s just a matter of how significant the change will be.

Four years, several changes in the scene

Looking back at the objective environment of the past four years, the most significant change lies in the stance of governments around the world towards Bitcoin. Small countries, like entrepreneurs on the global stage, are willing to take risks. For example, in 2021, El Salvador adopted Bitcoin as another legal tender, reducing reliance on the US dollar. Meanwhile, established powers, like vested interests, have always been reluctant to support Bitcoin. The US has repeatedly rejected Bitcoin spot ETF applications over the past decade but finally compromised and gave the green light at the beginning of this year. The market quickly grew as a result. Despite China’s historical crackdowns, they just approved a Bitcoin spot ETF through Hong Kong this month, and even an Ethereum ETF was also passed. In South Korea, both major parties’ election promises support Bitcoin ETFs, and policies towards Bitcoin in countries like the UK and Germany are becoming increasingly favorable. In short, even the US, which considers currency dominance as national security, cannot suppress Bitcoin. Instead, it is trying to absorb it into the system, and other governments have no reason or conditions to suppress Bitcoin.

The acceptance or compromise of governments not only dispels the clouds of possible bans on Bitcoin but also significantly lowers the entry barrier, creating institutional investors and traditional capital entering the market, another major change in the fourth cycle. Before this, Bitcoin holders ranged from cypherpunks at the beginning to tech enthusiasts and then to individual investors, whose capital scale couldn’t compare with institutional investors. Moreover, unlike individuals, institutional investment scopes are generally regulated, and it takes time for amendments. Those who entered the market shortly after the ETF launch are just a small portion of the early adopters. I believe many institutions or even governments will enter the market in the fifth cycle. Not only is their capital volume incomparable, but their decision-making process is also very different from that of individuals.

Of course, even with these two major positive factors, uncertainty still exists. For example, as mining rewards decrease, there’s concern about mining becoming more centralized. Or, will the emergence of ETFs gradually concentrate Bitcoin in the hands of a few institutions, effectively giving behind-the-scenes power to governments? I believe these concerns are valid and have discussed them in detail in my article ‘I Want Real Bitcoin: Bagging Bitcoin ETFs First’. I won’t elaborate on them here.

Some people worry about even more extreme black swan events, such as breakthroughs in quantum computing that could instantly crack encryption algorithms, or natural disasters leading to global power outages. My view is simple: if we could predict them, they wouldn’t be black swan events—they might just be ugly ducklings. Furthermore, even the US dollar and gold are susceptible to black swan events that could significantly devalue them or even render them worthless. So, considering these possibilities may not be meaningful.

Sometimes, the more details we delve into, the harder it is to grasp the big picture. The path to simplicity is focusing on the fundamentals. Maybe that’s where clarity lies. As for specific advice on Bitcoin, I’ll stick to my original verdict from four years ago: buy, buy, buy, and then buy some more. After hundreds of thousands of years of human evolution and technological development, it’s only been fifteen years since we first saw a digital asset with the potential to transcend borders and races, gaining consensus to become a universal store of value for Earthlings. Being able to participate in this process is a great privilege for our generation. Instead of asking why I buy, maybe it’s more appropriate to say, I can’t think of a reason not to hold at least some Bitcoin.

Here’s hoping that in four years, I’ll still have the courage to write about the fifth Bitcoin halving, to review the major Bitcoin events over the next four years, and to reassess today’s perspectives. I’ll see you in 2028.

p.s. I reused the cover image from four years ago not just out of laziness but also because I highly recommend the short film it’s from. It’s not only hilarious but also insightful.


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