Recently, the time period building up to Bitcoin halving reached 65% completion. It turns out that when this threshold was crossed in previous cycles, the BTC price was already above its historical bear market lows.
If a comparable situation exists today, the dip below $15,495 last month was most likely the macro bottom of this cycle. So, how is a 4-year Bitcoin halving effecting the cryptocurrency market, and what are the possibilities that BTC has already ended the bear market?
What exactly is Bitcoin halving?
Bitcoin is halved every four years on average. This occurrence is crucial to the cyclical structure of the bitcoin market. Because halving generates a supply shock, many believe it is a catalyst for long-term price gains in Bitcoin.
Every 10 minutes, the computer equipment (mining rigs) that power the Bitcoin network generate new BTC. They created 50 BTC every 10 minutes for the first four years of the network’s existence. The quantity of newly minted coins reduced to 25 BTC every 10 minutes when the initial halving happened in 2012. It was only 12.5 BTC in 2016. Currently – with the 2020 halving – only 6.25 BTC are issued after every 10 minutes.
According to the most recent forecasts, the next halving will take place on April 8, 2024. It will result in a further decrease in the number of Bitcoin miners issuing to 3.125 BTC per 10 minutes.
The basic role of the halving cycle is a predetermined reduction in the issuance of new coins at predictable time intervals. Less BTC on the market (supply in circulation) while maintaining the same or increasing demand causes the asset price to rise.
Indeed, the history of long-term BTC price action shows large increases after each halving. Counting from the day of the halving to historical all-time highs (ATH), there were increases of:
- 9594% in 2013-2014
- 3012% in 2016-2017
- 652% in 2020-2021
Bitcoin halving has been finished at 65%.
Yesterday, well-known on-chain and Bitcoin cycle expert @therationalroot posted a BTC chart with three past halvings. He indicated the area of 65% halving completion for each of them to indicate the price of BTC after that period. According to the analyst, we are currently at the same stage in the halving cycle.
The day when the current halving cycle reaches 65% is simply calculated. This is due to the fact that approximately 4-year cycles seem to persist a bit longer each time. As a result, the number of days required to meet the 65% criterion increases: after the first halving in the 2012-2016 cycle, it was 857 out of 1319 days, i.e. March 30, 2015 – the price of BTC was $250,It was 911 out of 1402 days, i.e. January 6, 2019 – the price of BTC was $3850, after the second halving in the 2016-2022 cycle.While it is currently 929 out of 1428 days, that is, on November 26, 2022 – the price of BTC was $16,500 after the third halving in the 2020-2024 cycle.
Has Bitcoin already hit rock bottom?
The most crucial result of this study is that in both previous cases where Bitcoin halving reached 65% (red lines), the price of BTC was already after the macro bottom of a given cycle. It was at $164 in 2015, and it was at $3148 four years later. If Bitcoin’s halving is still cyclical, the drop to $15,495 on November 21, 2022, would have to represent the bottom of the cycle.
Tradingview’s Bitcoin/USD chart
However, this does not imply that the Bitcoin price will continue to rise. Bitcoin’s price behavior was sideways for around 200 days (2015) or 100 days in the prior two cycles (2019). If this were to happen again, the long-term rise would begin between March and June 2023.
Furthermore, deep decreases occurred in both previous cycles immediately preceding Bitcoin halving (green areas). They did not, however, result in fresh cycle bottoms, but they did present an outstanding buying opportunity right before halving. Will history repeat itself once more? It’s unlikely, but it could rhyme.
Author: Crypto Tech News 24