The cryptocurrency community, including many prominent figures, is increasingly focusing on the upcoming Bitcoin halving. This event, which happens every four years, significantly reduces the number of new Bitcoins BTC entering the market, cutting the mining reward in half. The next halving, set for April 2024, will decrease the mining reward from the current 6.25 BTC per block to 3.125 BTC per block.
Changpeng Zhao, CEO of Binance, recently posted on X (formerly Twitter) to start a countdown for this event, highlighting that it’s only 135 days away. Historically, Bitcoin halvings have been associated with bullish trends in BTC’s price, attributed to the supply-demand principle. As the new supply of Bitcoin halves while demand continues or grows, the price typically rises in the months following the event.
Reflecting on the last bull cycle that began with the May 2020 halving, BTC’s price was below $10,000 shortly before the event. However, anticipatory bullish sentiment drove the price beyond the previous cycle’s high of around $17,000. Post-halving, Bitcoin entered a phase of parabolic growth, eventually reaching a record high of nearly $69,000.
Rekt Capital, a well-known trader and analyst, also shared insights on X, breaking down the BTC bull cycle into pre- and post-halving stages. According to the analyst, a rally often occurs around 60 days before the halving as investors engage in a “Buy the Hype” and “Sell the News” strategy. However, this pre-halving price surge typically sees a correction around the time of the halving itself. For instance, there was a -38% retrace in 2016 and a -20% retrace in 2020.
Following the pre-halving correction, there’s usually a multi-month reaccumulation phase where the price gradually increases. This stage can be challenging for investors, who might become impatient or disillusioned due to the slow pace of growth immediately after the halving. However, this phase eventually leads to a parabolic surge, where Bitcoin breaks out from the accumulation zone to reach new highs, often experiencing rapid growth and setting new records.
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