BITCOIN
The Bitcoin Halving Explained and Analysis
Since we’re all eagerly waiting for the halving in hopes of higher prices, I played with some charts.
I’ve been playing with the Bitcoin chart again, namely the infamous halvings.
Since I did the analysis, I thought I would share them with you, dear reader. First and foremost, never forget that I can’t see the future, and while history likes to rhyme, there is no guarantee it will follow the previous patterns.
Every moment in the market is unique.
What is the Bitcoin Halving?
Bitcoin is created through a process called mining. Miners use computers to solve problems, and as a reward, they get new Bitcoins, which they then sell on the market.
Bitcoin halving is a scheduled reduction (roughly every four years) in the rewards miners get by half, hence the name.
When Bitcoin started, miners received 50 Bitcoins for every batch of problems they solved (a block). After the first halving kicked in, they received only 25 Bitcoins. The second halving? They were down to 12.5. You get the pattern.
Cutting the number of new Bitcoins that miners receive adds to scarcity. Less supply potentially leads to more demand. Only 21 million Bitcoins will ever exist.
Here’s a table of previous Bitcoin halvings.
When is the next Bitcoin halving?
Here’s the live counter for you. According to current estimates, it will kick in on April 18, 2024.
Bitcoin halving analysis
I was interested in a few data points.
- How long did it take for the price of Bitcoin to reach a new top after halving?
- How much did the price of Bitcoin rise from the halving to the top of that cycle?
- How much lower was the price of Bitcoin from the previous top at the time of halving?
To summarize:
- It took about 900 days from halving to a new top. (The first having was a lot less — around 500 days)
- There is a pattern of diminishing returns on how high each new top of the cycle was from the halving event. Below are price increases in percentages, from halving to top.
1. Halving: 10790%
2. Halving: 3121%
3. Halving: 730%
4. Halving: ? (yet to be determined) - Bitcoin price was approximately 40–55% lower (65% on the first halving) from the top at the moment of halving.
The detailed answers are in the charts below. If you can’t see them, zoom in or open them in another tab/window. Or, you know, do your own research. They’re logarithmic because of the enormous price differences — for easier visualization.
The first halving
The second halving
Third halving
Fourth — current halving
I played around with some calculations, and by that, I mean I bugged AI to do it for me, and it came up with a predicted percentage increase from this halving in April to the top, sometime by the end of 2025.
It came up with a 170% increase from the halving moment. It seems rather pessimistic to me, but the last bull market was awfully uninspiring, so who knows?
Now we need an estimation of the price on the day of the halving (week). Again, we’re pulling these numbers and ideas from thin air based on previous cycles. They mean nothing. I know nothing! None of this needs to play out.
Bitcoin price at halving
Anyway, if we take two ranging scenarios into account, we get the following results:
- The high range. The price of Bitcoin is approximately 40% down from the top of the cycle when halving kicks in — roughly 40,000 USD.
- The low range. The price of Bitcoin is approximately 50% down from the top of the cycle when halving kicks in — roughly 30,000 USD.
Target for cycle top
These two completely arbitrary starting points bring us to the following targets for the next top of the current bull market cycle:
- 115,000 USD per Bitcoin.
- 90,000 USD per Bitcoin.
Here are the charts.
Version one
Version 2
Disappointed?
Yeah, I get it. I don’t like this particular idea, either. It is not impossible, though. If the diminishing returns continue to play out, it might even be probable.
Still, I hope we get higher by the time the fat lady stops singing — closer to 200,000 USD than 100,000 USD. I played with some ideas in this article. Go and check it out if you haven’t yet.
Now that I’ve ruined ruined your day, I say my goodbyes. Be well, friends.
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