Mining reward has not been the only thing that has halved in every halving cycle

[JaanusRaim]

I propose following two hypotheses for the first four BTC halving cycles.

Hypothesis no 1. The BTC price growth rate has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.
Hypothesis no 2. The BTC potential profitability (the difference between the actual BTC price and the potential BTC price) has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.

The starting price $0.001, differences from the potential BTC price $100000:$0.001 = 100 000 000x
The BTC price growth in accordance with the hypotheses:
The first halving (November 28, 2012) the cumulative price growth 10000x, the price level $10, differences from the potential BTC price $100000:$10 = 10 000x
The second halving (July 9, 2016) the cumulative price growth 10000x + 100x, the price level $1000, differences from the potential BTC price $100000:$1000 = 100x
The third halving (May 11, 2020) the cumulative price growth 10000x + 100x + 10x, the price level $10000, differences from the potential BTC price $100000:$10000 = 10x
The fourth halving (April 19, 2024) the cumulative price growth 10000x + 100x + 10 + 3.16x, the price level $31600, differences from the potential BTC price $100000:$316000 = 3.16x

The actual price growth:
The first halving (November 28, 2012) the cumulative price growth 12 400x, the price level $12.4, differences from the potential BTC price $100000:$12.4 = 8065x
The second halving (July 9, 2016) the cumulative price growth 651 800x, the price level $651.8, differences from the potential BTC price $100000:$651.8 = 153x
The third halving (May 11, 2020) the cumulative price growth 8 579 800x, the price level $8579.8, differences from the potential BTC price $100000:$8579.8 = 11.66x
The fourth halving (April 19, 2024) the cumulative price growth 63 799 100x, the price level $63799.1, differences from the potential BTC price $100000:$63799.1 = 1.57x

The results do not chance dramatically if we use halving years average prices instead of daily prices:
2012: $8.36
2016: $568.49
2020: $11116.38
2024: $65964.11

The starting price ($0.001) comes from the Matti Malmi first Bitcoin trade.
The potential BTC price, the "attractor" ($100 000) comes from the Rick Valkfinge article published 2013 as the low tier Bitcoin long-run price projection. At the moment $100 000 is the ATH Bitcoin price as well.

As we can see the hypotheses seem the work better for the first three halvings (for the first 12 Bitcoin years, the period 2009-2020). They do not present so well when we insert the fourth halving period into the sample.

The first, second, and third halving cycles have each one indeed reduced BTC's potential profitability by approximately half in log scale. The fourth halving cycle has reduced BTC's potential profitability by approximately three-quarters in log scale.

[Nathrixxx]

Why not try to make things more explanatory and easier for members to comprehend? It will be very difficult for someone to easily understand the exact idea you are suggesting from the content you made.

Let's make things simple and precise rather than beating around the bush. When we are yet to arrive at a particular conclusion on what we are trying to buttress, we have a halving cycle, which makes us experience half the reward of Bitcoin, and the same is what we also experience when the number of Bitcoins to be mined is diminishing every halving cycle.

[Kryptowerk]

Why not try to make things more explanatory and easier for members to comprehend? [...]

I'm also not sure if I understood OP correctly. I guess he's referring to a relation regarding coin emission per block and BTC price. Which for anyone following BTC price evolution obviously isn't a big surprise, since the halving cycles had a pretty clear correlation towards new ATH in Bitcoin price.
However the interesting part is that Op sees a log scale pattern in regards of growth rate and "potential profitability".

Hypothesis no 1. The BTC price growth rate has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.
Hypothesis no 2. The BTC potential profitability (the difference between the actual BTC price and the potential BTC price) has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.

@JaanusRaim
Are you saying that BTC price is inversely proportional to the Block reward? How would you add your log-pattern in the following formular?

BTC price ∝ 1/(block reward)

[sergiorus]

Well the returns weren't exactly ''halving'', they are sure diminishing but that just happens when the capitalisation of an asset grows.

You can see it with the altcoins with a long established chart history that do new highs every cycle, most of them do not have ''halvings'', some are not even mineable, yet the returns are diminishing as well.

Long story short: you're right about diminishing growth rate but there's no correlation with halvings of mining rewards.

[JaanusRaim]

Well the returns weren't exactly ''halving'', they are sure diminishing but that just happens when the capitalisation of an asset grows.

You can see it with the altcoins with a long established chart history that do new highs every cycle, most of them do not have ''halvings'', some are not even mineable, yet the returns are diminishing as well.

Long story short: you're right about diminishing growth rate but there's no correlation with halvings of mining rewards.

The diminishing growth rate is no surprise but both the Bitcoin price increases and potential profitability have literally halved in log scale - especially during the first free halving cycles.

Why not try to make things more explanatory and easier for members to comprehend? It will be very difficult for someone to easily understand the exact idea you are suggesting from the content you made.

Let's make things simple and precise rather than beating around the bush. When we are yet to arrive at a particular conclusion on what we are trying to buttress, we have a halving cycle, which makes us experience half the reward of Bitcoin, and the same is what we also experience when the number of Bitcoins to be mined is diminishing every halving cycle.

No flowery language is needed here; the numbers speak for themselves.

Prices:
$0.001
$12.4
$651.8
$8579.8

Potential profitabilities:
$100000:$0.001 = 100 000 000x
$100000:$12.4 = 8065x
$100000:$651.8 = 153x
$100000:$8579.8 = 11.66x

The numbers of the first three cycles are amazing. I have never seen something similar. The first word that comes to mind here is the golden ratio.

Why not try to make things more explanatory and easier for members to comprehend? [...]

I'm also not sure if I understood OP correctly. I guess he's referring to a relation regarding coin emission per block and BTC price. Which for anyone following BTC price evolution obviously isn't a big surprise, since the halving cycles had a pretty clear correlation towards new ATH in Bitcoin price.
However the interesting part is that Op sees a log scale pattern in regards of growth rate and "potential profitability".

Hypothesis no 1. The BTC price growth rate has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.
Hypothesis no 2. The BTC potential profitability (the difference between the actual BTC price and the potential BTC price) has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.

@JaanusRaim
Are you saying that BTC price is inversely proportional to the Block reward? How would you add your log-pattern in the following formular?

BTC price ∝ 1/(block reward)

Yes, I think you understood me correctly.
We are witnessing that both BTC price growth rate and BTC potential profitability (towards "the attractor" $100000) in log scale are proportional to the block reward. Not only proportional but almost identical during the first three cycles.

$0.001
$12.4 (the ideal figure could be $10.0, difference ca 0.1 orders of magnitude from 4 orders of magnitude price increases)
$651.8 (the ideal figure could be $1000.0, difference ca 0.2 orders of magnitude from 6 orders of magnitude price increases)
$8579.8 (the ideal figure could be $10000.0, difference ca 0.1 orders of magnitude from 7 orders of magnitude price increases)

$100000:$0.001 = 100 000 000x
$100000:$12.4 = 8065x (the ideal figure could be 10000x)
$100000:$651.8 = 153x (the ideal figure could be 100x)
$100000:$8579.8 = 11.66x (the ideal figure could be 10x)


log BTC price growth rate  ∝ block reward
log BTC potential profitability ∝ block reward

And we can almost replace the symbol "∝" with the symbol "=" when we look at the first three cycles.

This magic of numbers would be even more powerful if it turned out that "the attractor" $100000 (or 8 orders of magnitude price increases) is not merely the local Bitcoin ATH of the fifth halving cycle, but the absolute all-time high in the entire history of Bitcoin - the Great Attractor.... But we don't know that yet. Only time will tell.

[Donneski]

While I agree that diminishing returns make sense as Bitcoin matures, I'm not convinced that the halving alone explains the pattern.

What the halving do is to cut the block subsidy in half, that's not a guarantee that price growth or profitability will follow a predictable formula.

There are other factors that make that also contribute their part like demand, liquidity and the broader market.

[JaanusRaim]

While I agree that diminishing returns make sense as Bitcoin matures, I'm not convinced that the halving alone explains the pattern.

What the halving do is to cut the block subsidy in half, that's not a guarantee that price growth or profitability will follow a predictable formula.

There are other factors that make that also contribute their part like demand, liquidity and the broader market.

Agreed. The halving of the block reward is not—and cannot be—the cause, as it is an almost entirely predictable event.
And it does not guarantee that price growth or profitability will follow a predictable formula.

This connection must be a pure coincidence. But what a beautiful coincidence!
$0.001
$12.4
$651.8
$8579.8

100 000 000x
8065x
153x
11.66x

What is the probability that something so beautiful might emerge? 1:1 000 000 ? 1:1 000 000 000?
Perhaps this very "golden ratio" is (subconsciously) one of the reasons for the Bitcoin cult that we see today... We have all felt these magical numbers, even if we haven’t been aware of their existence.

[Darker45]

Perhaps this very "golden ratio" is (subconsciously) one of the reasons for the Bitcoin cult that we see today... We have all felt these magical numbers, even if we haven’t been aware of their existence.

The Bitcoin cult, of which you seem to be a member, is born because some people are attaching magical meanings to what's otherwise simply logical.

I don't know if I get exactly what you're driving at, but it seems you're extremely amazed at the correlation of numbers which are not completely unrelated at all.

Early price growth is understandably faster than later ones because the price was extremely low. Therefore, the market only needs a smaller capital for its value to multiply. The growth naturally slows down as the price further increases. Along with it, of course, is profitability. And then there's also the saturation factor in the market. On the other hand, halvings mean the regular injection of new supply in circulation is systematically reduced. So, it can't suppress the growth and demand. And it's predictable. It's a pattern, out of which arises another pattern of market behaviors.

[Dave1]

Perhaps this very "golden ratio" is (subconsciously) one of the reasons for the Bitcoin cult that we see today... We have all felt these magical numbers, even if we haven’t been aware of their existence.

The Bitcoin cult, of which you seem to be a member, is born because some people are attaching magical meanings to what's otherwise simply logical.

I don't know if I get exactly what you're driving at, but it seems you're extremely amazed at the correlation of numbers which are not completely unrelated at all.

Early price growth is understandably faster than later ones because the price was extremely low. Therefore, the market only needs a smaller capital for its value to multiply. The growth naturally slows down as the price further increases. Along with it, of course, is profitability. And then there's also the saturation factor in the market. On the other hand, halvings mean the regular injection of new supply in circulation is systematically reduced. So, it can't suppress the growth and demand. And it's predictable. It's a pattern, out of which arises another pattern of market behaviors.

Exactly, and do add to that, I don't know, it makes thing complicated to us to understand. On the contrary, some of us might not go with that too much technicalities, same as when we see graphs and patterns for predicting the price in the future.

In any case, others might find the numbers or the idea of the OP. But for the majority of us, it might be better to not dig ourselves with this kind of conundrums. For us, there is going to be halving no matter what every 4 years and this is the catalyst of the next eventual bull run.

[sergiorus]

Well the returns weren't exactly ''halving'', they are sure diminishing but that just happens when the capitalisation of an asset grows.

You can see it with the altcoins with a long established chart history that do new highs every cycle, most of them do not have ''halvings'', some are not even mineable, yet the returns are diminishing as well.

Long story short: you're right about diminishing growth rate but there's no correlation with halvings of mining rewards.

The diminishing growth rate is no surprise but both the Bitcoin price increases and potential profitability have literally halved in log scale - especially during the first free halving cycles.

Are you sure of the math? from what I see the profitability way more than *halved*, speaking freely it was collapsing every cycle. If the profitability was only *halving*, the price of BTC would have been many many times higher now.

But again, looking at the older altcoins with chart history - it was pretty much the same for them.

[JaanusRaim]

Well the returns weren't exactly ''halving'', they are sure diminishing but that just happens when the capitalisation of an asset grows.

You can see it with the altcoins with a long established chart history that do new highs every cycle, most of them do not have ''halvings'', some are not even mineable, yet the returns are diminishing as well.

Long story short: you're right about diminishing growth rate but there's no correlation with halvings of mining rewards.

The diminishing growth rate is no surprise but both the Bitcoin price increases and potential profitability have literally halved in log scale - especially during the first free halving cycles.

Are you sure of the math? from what I see the profitability way more than *halved*, speaking freely it was collapsing every cycle. If the profitability was only *halving*, the price of BTC would have been many many times higher now.

But again, looking at the older altcoins with chart history - it was pretty much the same for them.

Both price growth and potential profitability are halved in log scale.

I have found no altcoin (nor other asset) whose price development resembles with Bitcoin during its first three halving cycles. Except that their early price growth is understandably faster than later ones.

Perhaps this very "golden ratio" is (subconsciously) one of the reasons for the Bitcoin cult that we see today... We have all felt these magical numbers, even if we haven’t been aware of their existence.

The Bitcoin cult, of which you seem to be a member, is born because some people are attaching magical meanings to what's otherwise simply logical.

I don't know if I get exactly what you're driving at, but it seems you're extremely amazed at the correlation of numbers which are not completely unrelated at all.

Early price growth is understandably faster than later ones because the price was extremely low. Therefore, the market only needs a smaller capital for its value to multiply. The growth naturally slows down as the price further increases. Along with it, of course, is profitability. And then there's also the saturation factor in the market. On the other hand, halvings mean the regular injection of new supply in circulation is systematically reduced. So, it can't suppress the growth and demand. And it's predictable. It's a pattern, out of which arises another pattern of market behaviors.

Of cause, the numbers are related. And something similar is found for example in Litecoin, Etherum and Dogecoin, the real estate in the Former Soviet Union and so on and so on. However, this similarity is limited solely to the existence of the fact you pointed out: early price growth is much faster than the later ones.
But neither the price growth nor potential profitability decrease follow the same rule as for BTC...
During the first halving cycle (4 years), the price of BTC increased by almost - the error is remarkably insignificant 0.1 order of magnitudes from 4.0 order of magnitudes - exactly the same amount (10000x) as it did in all the subsequent years combined.
During the second halving cycle, the price of BTC increased by almost exactly the same amount (100x) as it did in all the subsequent years combined.
During the third halving cycle, the price of BTC increased by almost exactly the same amount (10x) as it did in all the subsequent years combined.

During the first halving cycle, the potential profitability of BTC decreased by almost exactly the same amount as it did in all the subsequent years combined.
During the second halving cycle, the potential profitability of BTC decreased by almost exactly the same amount as it did in all the subsequent years combined.
During the third halving cycle, the potential profitability of BTC decreased by almost exactly the same amount as it did in all the subsequent years combined.

Point out some other asset that could show something similar and I will abandon the Bitcoin cult instantly.

[Kryptowerk]

[...]

Why not try to make things more explanatory and easier for members to comprehend? [...]

I'm also not sure if I understood OP correctly. I guess he's referring to a relation regarding coin emission per block and BTC price. Which for anyone following BTC price evolution obviously isn't a big surprise, since the halving cycles had a pretty clear correlation towards new ATH in Bitcoin price.
However the interesting part is that Op sees a log scale pattern in regards of growth rate and "potential profitability".

Hypothesis no 1. The BTC price growth rate has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.
Hypothesis no 2. The BTC potential profitability (the difference between the actual BTC price and the potential BTC price) has halved in log scale with every halving cycle (four years) during the BTC first four halving cycles.

@JaanusRaim
Are you saying that BTC price is inversely proportional to the Block reward? How would you add your log-pattern in the following formular?
[/size]
BTC price ∝ 1/(block reward)

Yes, I think you understood me correctly.
We are witnessing that both BTC price growth rate and BTC potential profitability (towards "the attractor" $100000) in log scale are proportional to the block reward. Not only proportional but almost identical during the first three cycles.

$0.001
$12.4 (the ideal figure could be $10.0, difference ca 0.1 orders of magnitude from 4 orders of magnitude price increases)
$651.8 (the ideal figure could be $1000.0, difference ca 0.2 orders of magnitude from 6 orders of magnitude price increases)
$8579.8 (the ideal figure could be $10000.0, difference ca 0.1 orders of magnitude from 7 orders of magnitude price increases)

$100000:$0.001 = 100 000 000x
$100000:$12.4 = 8065x (the ideal figure could be 10000x)
$100000:$651.8 = 153x (the ideal figure could be 100x)
$100000:$8579.8 = 11.66x (the ideal figure could be 10x)


log BTC price growth rate  ∝ block reward
log BTC potential profitability ∝ block reward

And we can almost replace the symbol "∝" with the symbol "=" when we look at the first three cycles.

This magic of numbers would be even more powerful if it turned out that "the attractor" $100000 (or 8 orders of magnitude price increases) is not merely the local Bitcoin ATH of the fifth halving cycle, but the absolute all-time high in the entire history of Bitcoin - the Great Attractor.... But we don't know that yet. Only time will tell.

Okay, thanks for the clarification. Regarding the Great Attractor ( I'm always thinking of the cool looking Lorentz-Attractor graphs when hearing this) of $100,000 - I highly doubt that, unless we see a stop of inflation in fiat currency I believe the price of Bitcoin will continuesly rise, even though less strongly as in the first few cycles.

You gave us the multipliers for the previous cycles. Can you extrapolate the predicted multipliers based on your model for the current and upcoming ones?

[EluguHcman]

Your topic or thread would had  really been a nice discussion but it is like you ruined it with how you structured the contexts which makes it all incomprehensible.
Either the theoretical terms and the parts that seems technical is all just seem baseless.
Maybe if you can make out time and review the post again and edit it.

The first, second, and third halving cycles have each one indeed reduced BTC's potential profitability by approximately half in log scale. The fourth halving cycle has reduced BTC's potential profitability by approximately three-quarters in log scale.

Bitcoin halving has always been known to be Bitcoin event that occurs in every 4 years which the reduction of the miners rewards do slashes the value of Bitcoin and the certain time.
It is also good telling that the halving is an activity that lingers to the Super Bull Run.

That is my little knowledge of understanding and what I can  offer.

[yhiaali3]

Why all this complexity and delving into intricate mathematical details? To put things much simply, it is true that there has been a decreasing growth rate of Bitcoin in recent cycles, as you say, but that makes no difference to the average user.

All that matters to the average user is that the price of Bitcoin started at 1 cent and ended at $100k and may rise to a million dollars in the distant future. So all this complex mathematics does not concern him as much as the fact that the price is growing over time and that he will eventually make huge profits.