- Bitcoin halving – In technical analysis, we understand that the prices of cryptos can be predicted by observing and analyzing charts and patterns or historical price behaviour.
The next Bitcoin halving event is estimated to take place on April 17, 2024, and from the previous history, BTC, XRP, and the rest of the crypto investors could smile again. Interestingly, Bitcoin, for the first time, breached its all-time high price before the halving event after hitting $73k. In this article, I will explain why the digital asset could go as high as $200,000 after the halving.
What is Bitcoin halving?
Bitcoin halving is an occasional event that splits the Bitcoin reward by 50%. The first Bitcoin halving occurred in 2012. Before this event, the Bitcoin reward was 50 BTC. After the event, the block reward was reduced to 25 BTC.
The next halving event took place in 2016. The block reward underwent another split which saw miners receiving 12.5 BTC.
The third event took place in May 2020, and the block reward was reduced to 6.25 BTC. In Summary, Bitcoin halving occurred in 2012, 2016, and 2020.
From this breakdown, we can observe that Bitcoin halving occurs every four years. Technically, it occurs after every 210,000 blocks are mined.
In technical analysis, we understand that the prices of cryptos can be predicted by observing and analyzing charts and patterns or historical price behaviour. Let us dive straight into the analysis.
Let’s Get Started
In 2013, Bitcoin recorded one of its all-time high prices of above $1000. In December 2017, Bitcoin recorded its all-time high of nearly $20,000. In 2021, Bitcoin recorded an all-time high of $69,000.
Do you get my point? I guess not. I might be confusing you, but don’t worry. Let’s tackle this once and for all.
After the first-ever halving event in 2012, Bitcoin went ahead to record a price as high as $1000 in 2013, and that was the first time it ever tasted that price point.
After the 2016 halving event, Bitcoin went ahead to hit $2,525 from $268 and later recorded an all-time high price of nearly $20,000 in December 2017.
Finally, Bitcoin hit a record price of $69,000 in 2021 after the 2020 halving.
What does this mean? Anytime this event occurs, Bitcoin stages an insane bull run to double or triple its previous high within 17 months.
What will happen in 2025
The next halving event would take place in April 2024, and the mining reward would be reduced by half, from 6.25 to 3.125.
The basic law of demand and Supply
As the mining reward keeps reducing, miners are pushed out of the market as it becomes less lucrative. This decreases supply and pushes the price up as demand increases. In other words, the price of an asset rises when supply falls with increasing demand.
According to Glen Goodman, a Bitcoin analyst and author, previous halvings have shown a negligible impact on Bitcoin’s price.
Previous halvings have shown a negligible impact on Bitcoin’s price. This is because, rather like a much-anticipated interest rate cut, everybody already knows it’s going to happen way in advance.
The reason behind the Bitcoin price surge after each halving event is unknown, but it is believed that the big whales buy more before the event, which in return, causes the market price to rise. Months after causing the bull run, the whales usually step out of the market, leading to a significant correction which can last for 24 months.
“Big whales are people who hold a large amount of Bitcoin and can determine the direction of the price.”
What Happens After the Bitcoin Halving
In economics, one of the price determinants of a commodity is the anticipation of a future price increase or decrease. Investors buy more as they wait for a bull run after the much-anticipated Bitcoin halving. This reduces supply and causes the price to increase.
So What Happens After the Bitcoin Halving?
Two things happened after the Bitcoin halving.
- The price makes an insane surge as we experienced in the three previous halvings – Bitcoin recorded all-time highs of $1000, near $20000, and $69,000 after each previous Bitcoin halving.
- The price will take a deep fall after the price reaches its peak.
After Bitcoin recorded a little over $2000 after its first halving, the price crashed by 80% to trade as low as $200 before surging again.
After the 2017 market bull run, Bitcoin experienced a severe market pullback, pushing the digital asset to trade below $4000.
Finally, after the $69,000 peak price in 2021, the price crashed down below $20,000.
Lesson to Investors
From the above observation, investors need to plan well if they seek to take advantage of the market. Investors should know when to exit to avoid running into a year-long correction.
Also, investors should understand that nothing is certain in the world of cryptocurrency. The price is affected by the interplay of multiple factors of which the more dominant factor determines the direction of the market.
What Happens to XRP and Other Altcoins
XRP and other altcoins rise as BTC rises, and fall as BTC falls.
“A rising tide affects all boats, and that applies to the crypto market. A win for Bitcoin is a win for all”
