Research finds Bitcoin and Litecoin halvings do not impact price

Published on by Cryptoslate | Published on

Contrary to the popular media narrative, new research finds that Bitcoin and Litecoin prices are unimpacted by block reward halvings.

2012: 10m before halving btc $5, at halving $12.2016: 10m before halving btc $237, at halving $627 pic.

Publications, including CryptoSlate, pinned the price increase on the upcoming halving.

Research conducted by Nico Cordeiro and Ava Masucci from Strix Leviathan, a Seattle-based startup that specializes in engineering and operating trading algorithms for the cryptocurrency markets, challenge the belief halvings materially impact coin prices.

The researchers analyzed 32 halvings across 24 cryptocurrencies and compared these to an overall market benchmark.

Performance of each coin was evaluated six months before and after each halving and compared against cryptocurrencies not going through a halving event in the same timeframe.

"The divergence and seemingly random results before and following a halving suggests that the underlying factors driving price is not a shift in supply and demand dynamics."

Historically, variations in price should increase during a halving period.

The researchers found that coins undergoing a halving event did not experience outsized volatility, or returns, before or after a halving.

"What we find is that the return distribution of an asset's halving periods versus the return distribution outside of its halving periods reveals that they are statistically the same at a 99 percent confidence level. In other words, we did not find evidence that a halving event results in abnormal pricing action and we are dealing with a circumstantial illusion."