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The 2020 Bitcoin Halving Bull Run: Why This Cycle Is Different

Mitchell Koulouris
Coinmonks
8 min readNov 9, 2020

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Whether you’re a newbie or a veteran HODLer, one of the most anticipated, celebrated, and watched events in the Bitcoin universe is the halving. This is when — roughly every four years — the amount of Bitcoin that miners earn is cut in half. An automatic deflationary trigger that occurs every 210,000 blocks that are mined, it’s perhaps the single most important feature that is built into Bitcoin’s protocol to automatically reduce the number of coins introduced into circulation.

Way back in 2009 when Bitcoin was new, miners received 50 BTC as a reward for each block mined. Approximately 10.5 million Bitcoin were minted in these early years before the first halving took place in November 2012. When this first halving occurred, the amount of Bitcoin miners would received for each block was cut in half — to 25 BTC. Likewise, the next halving — in July 2016 cut the miner reward to 12.5 BTC per block mined and in May 2020, the reward was automated reduced (halved) to 6.25 BTC per block.

Bitcoin Halvings and Subsequent Bull Runs

The months following each halving were followed by bull runs were we saw the price of Bitcoin rise dramatically. Because the halving significantly reduces the amount of new BTC coming into circulation, this creates scarcity. It’s simple supply/demand economics.

To illustrate, on the day of the first halving in November 2012, the price of one Bitcoin was about $11.50. Over the next 12 months, the price of Bitcoin rose to $270 in late April 2013.

Bitcoin halving cycles. Each halving cycle has been longer and not as strong as the previous cycle.

Fast forward to the next halving in July 2016. Bitcoin’s price on July 9, 2016 (the date of the second halving) was about $650. Over the next 18 months which included many volatile ups and downs, by December 2017 Bitcoin was now trading at just about $20,000.

Most people agree the Bitcoin halving event has been the catalyst to subsequent market bull runs. After all, Bitcoin’s price appreciated over 12,000% in the period after each halving in 2012 and 2016. One interesting fact about the previous two halvings — it took Bitcoin twice as long to experience roughly the same growth and price appreciation (1,067 days in the second halving in 2016 vs 513 days in the first halving in 2012).

One key takeaway for many T-A (technical analysis) experts is the period after a Bitcoin halving resulted in a bull market that was a little less strong but a little longer than the last one. And depending on who you subscribe to (or believe), the third Bitcoin halving that just took place in May 2020 will be a bit longer than the last but not quite as strong. Again, depending on the pundits who you listen to in the Bitcoin universe, the Bitcoin price has been pegged at the top of the coming 2020–2021 bull run at anywhere from $120,000 to $288,000 (or more). In this best case scenario (based on a Bitcoin price as of this writing at roughly $15,000, this would result in anywhere from an 8x to 20x multiple ROI. Not bad. Not bad at all. But I’m going out on a limb and say they’re wrong.

Why This Bull Run is Different

PlanB’s Stock 2 Flow model sparked the debate on what Bitcoin’s growth looks like over the next several years. It predicts Bitcoin’s price somewhere between $100,000 to $288,000 by the end of 2021. And just like clockwork, Bitcoin’s price seems to be tracking with this model perfectly. I’m here to tell you, while fantastic, PlanB’s forecast will be below actual performance because he hasn’t included significant factors that make this cycle much different than the last two.

PlanB’s Stock 2 Flow model predicts Bitcoin’s price between $100,000 and $288,000 by the end of 2021.and over $1 million by 2025.

Look, I’m not a blue sky, everything is rosy kind of a guy. But I like to think my glass is more half full than it is empty. And I’m by no means a T-A expert. But this bull cycle for Bitcoin will be different — much different. And the return will be jaw dropping. And it’s something that even the best T-A experts haven’t factored.

This cycle will be impacted by events no one could have predicted — Covid-19. The spread of and aftermath from Covid-19 along with other factors has impacted the world (and Bitcoin) in ways we couldn’t imagine.

  • Social lockdowns leading to businesses shuttering at an alarming rate,
  • Unemployment reaching spectacular levels never seen in our lifetime,
  • Governments around the world endlessly printing fiat currency to prop up economies (driving inflation or hyper-inflation),
  • Interest rates going into negative territory driving corporations in record numbers to a value safe haven,
  • People afraid of contracting or transmitting Covid-19 not wanting to handle physical currency (and the subsequent accelerated and rapid adoption of cryptocurrency),
  • Corporations dumping cash in favor of Bitcoin in unprecedented quantities (here’s an article that illustrates this) in a mad rush for a hedge against inflation,
  • Mainstream adoption by corporations and financial institutions such as MicrosStrategy, PayPal, and Square as well as funds such as Grayscale and Fidelity among others,
  • Average Joe (retail) adoption at a level not imagined even just a year ago as people frantically look to Bitcoin to preserve value in what the do have in a fight against inflation,
  • Entire countries turning to Bitcoin to stabilize their economies,
  • Overall significant maturation of the Bitcoin market compared to previous cycles, and
  • Supply so scarce, Bitcoin’s price is driven to highs previously not thought possible.

These basic (but significant) factors make for a perfect storm for Bitcoin. And neither of the previous two halvings had anywhere near similar market conditions that featured both dire economic conditions coupled with unprecedented mainstream adoption. And it’s only going to get better for Bitcoin.

These are the factors that become serious wildcards (or variables) that are difficult to quantify in a spreadsheet.

So while many T-A experts say that the bull cycle we about to enter today will be slightly longer but not as strong, I say you’re wrong. It will be much longer much stronger.

In fact, these “perfect storm” market conditions will bring something no one is expecting for Bitcoin. We will not only experience a bull run that will be much longer than the last two but will be sustained through the next halving cycle in 2024. This means that the Bitcoin price will not experience an overall market retracement at some point as we have had in past cycles but rather will continue its bull run through the 2024 halving and beyond.

Remember, the amount of Bitcoin earned by miners is cut in half each cycle making the reward for mining a block only 3.125 BTC after the next halving (in 2024). That is not to say that Bitcoin will have an unfettered parabolic rise — it will indeed still experience double-digit corrections along the way. But we are unlikely to see a sustained bear market play out like we had seen after the last two bull-runs.

This will result in a “scarcity squeeze” post 2024 halving that will take on new meaning and be seen in a whole new light. And it will be nearly impossible to buy an entire Bitcoin, much less buy it at a relatively reasonable price.

This scarcity will be beyond what even the most ardent Bitcoin maximalist could ever imagine and gives us the recipe for a Bitcoin bull run for the ages. Bitcoin’s market cap will easily exceed that of gold (which is $9 trillion today), perhaps even by an order of magnitude — 2–3x that of gold. It won’t be until well into the post 2024 halving that Bitcoin will begin to level out, hitting its stride as the world’s premier store of value.

As MicroStrategy CEO Michael Saylor recently said, “Bitcoin is the greatest monetary athlete of our time. Superstar athletes are exceptional, enigmatic, & erratic in their first decade as they learn & master their craft. In their second decade, they crush everyone and everything in their path.” This pretty much sums it up.

I know I’ll be hit with haters calling me every name in the book or those saying I’m taking a pie in the sky view of the market. But if you take a step back, the picture and market conditions are quite clear. The variables (market conditions) I point to above make this particular market cycle is like no other before it or perhaps after. To break down the Bitcoin year-end price this cycle and through the 2024 halving is anybody’s guess. But I don’t think it’s unreasonable or out of the question to think Bitcoin’s price couldn’t rise to well over $325,000 by the end of 2021 and nearly $2 million by 2025 — because of the unique market conditions this cycle.

Yes, a $2 million Bitcoin is hard to imagine now. But it’s no harder to imagine than a $15,000 Bitcoin price in 2012 when the price sat at $11.50. And today’s market is much more mature with “perfect storm” market conditions not even imagined just a year ago. It makes this Bitcoin bull cycle a once-in-a-generation opportunity that you’ll be glad you became a part of. And it’s only just now getting started.

About The Author

Mitchell Koulouris is a Bitcoin analyst and pundit. You can contact Mitchell at mitchkoul@gmail.com. Subscribe to Mitch’s YouTube channel, Bitcoin Informant at https://www.youtube.com/c/BitcoinInformantShow.

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Mitchell Koulouris
Coinmonks

Written by Mitchell Koulouris

164 Followers

Bitcoin, blockchain, cryptocurrency pundit & blogger, and former Nasdaq company CEO. Follow me on Twitter @MitchKoulouris

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