There are still around 5.5 months until the next Bitcoin halving.
Price declines could occur during this market phase.
Cryptocurrency analyst and trader Rekt Capital today described a pattern that the price of Bitcoin (BTC) has experienced in the past before the halving. These are 5 phases that illustrate how the market could behave in the coming months.
According to Rekt Capital, Bitcoin it is found currently in the first of these phases, as there are still about five and a half months left until the halving. This comes as the currency trades around $34,000, a price zone it reached this week for the first time in just over a year.
The analyst points out that historically, any sharp decline that occurs during this phase tends to result in a fantastic return on investment for investors in the months following the halving.
The halving is the halving of the issuance of Bitcoin, which occurs every approximately four years, as CriptoNoticias Cryptopedia explains. So far this event has occurred three times and the next one is scheduled to take place in April-May 2024.
The price of BTC has reached a new all-time high after every halving. due to the demand caused by the scarcity of the asset. Therefore, there are currently bullish expectations regarding its proximity, which has partly motivated the recent rise to around $34,000.
In the chart below you can see the sequence of 5 phases Bitcoin went through in the previous halving in 2020 and the next one if history repeats itself. The first of these phases is colored yellow.
The second phase, colored light blue in the graphic, takes place about 60 days before the halving. Here we see an increase in investment activity as investors anticipating such an event appear to “buy” the news before it comes to fruition.
Therefore, in this period The price of Bitcoin is rising due to greater demand due to the excitement generated by the upcoming halving.
After that, demand decreases, causing supply in the market to become stronger. Therefore, there is currently a decline in Bitcoin price, leading to the third phase of this historical sequence.
Typically, this phase occurs around the halving, as shown in the blue circle on the chart. At this stage, Rekt Capital points this out In 2016 the price drop was 38% and in 2020 it was 20%..
The analyst warns that this moment of reduction “leads investors to wonder whether the halving was not, after all, an upward catalyst for the price.” But amid the doubts, optimism is strengthening again, paving the way to the next stage.
The fourth phase is a case of reaccumulation over several months. by investors. This happens after the halving. It can be seen in the previous graphic colored in red.
“Many investors are shaken at this point out of boredom, impatience and disappointment due to the lack of important results from their BTC investment immediately after the halving,” explains Rekt Capital.
This growing demand leads to the fifth and final phase of this historical sequence, the most anticipated and longed for by some. It is known as the parabolic Bitcoin uptrend.
During this phase, colored green in the chart, strong demand leads to accelerated growth in the Bitcoin price. At this time, new all-time high prices were always reached.
BTC is currently trading 50% below its all-time high
Currently, BTC is 50% below its previous all-time high of $69,000 almost two years ago. And if it repeats its post-halving cyclical behavior, it would rally to such a price months after such an event.
Analysts and industry companies such as the investment company Matrixport, They predict that the price reach a new high until the end of 2024 historic. This is not only due to the demand driving the halving, but also the possible approval of the first BTC exchange traded funds (ETFs) in the US.
However, it should be noted that past cycles are not a guarantee of the future and the price depends on market conditions at all times. Therefore, it is important for investors to collaborate on any analysis and anticipate risk before making a transaction.