The Bitcoin Halving is a major event that impacts the price of all cryptocurrencies. It occurs every four years, reducing the supply of Bitcoin and causing the price to rise. Traders and investors use the Halving to time their entries and exits in the market. Buying before the event and selling during the resulting bull run has proven successful for many, including myself who sold the top in November 2021. Keep an eye on the Halving and use it to your advantage in the exciting world of crypto trading.
The Bitcoin Halving is set for April 27, 2024, but the event time may shift due to Hash rate. As computing power ramps up, it’s possible the event could come forward to early April.
You can track the halving here: http://bitcoinblockhalf.com
Bitcoin Halving creates the 4-year market cycle in crypto: The last 2 cycles ran for 35 months from bottom to top, and 47 months from bottom to bottom. Each cycle, the Halving occurs just before the parabolic run to the new ATH, creating an exciting opportunity for traders and investors.
Did you know the crypto market cycle moves through 4 stages: Accumulation, Re-accumulation, Bull Market, and Bear Market? The Halving occurs during the Re-accumulation stage, a few months after the start of the Bull Market.
The Halving triggers a bull run in crypto due to reduced mining supply and increased demand. Miners must sell Bitcoin at higher prices to sustain operations, driving up demand. The last Halving occurred on May 11th, 2020, and we can expect similar market patterns in 2024.
On May 11th, 2020 ,the algorithm behind Bitcoin’s mining process cut the mining supply for Bitcoin in half, from 12.5 coins per block to 6.25 coins per block. This significant reduction in supply overnight had a massive impact on Bitcoin miners.
With this cut in supply, the cost of producing Bitcoin doubled for miners. As a result, they had to sell their existing Bitcoin at higher prices.
Miners sell extra coins before the Halving to prepare for reduced mining rewards and cover costs while holding coins post-Halving. Understanding miner behavior leading up to the Halving is crucial for success in crypto trading.
JP Morgan expects Bitcoin production costs to rise to $40,000 per coin based on Adam Hayes’ 2015 paper. This prediction highlights the importance of staying informed on market trends when trading crypto. You can check the article out here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580904
1- With supply cut and upwards pressure on cost of production meaning miners also won’t sell until they are back into profit. This causes the price to rise to meet a new equilibrium Micro Economics 101.
2- This rise in price causes hype and excitement which draws in new market participants and media start talking again about bitcoin which creates more demand.
With two significant supply cuts and increasing demand, we’ve entered the later stages of the market cycle and a parabolic bull market phase. Being aware of these supply and demand dynamics is crucial for success in crypto trading.
(1) Exiting the accumulation phase and entering a new market cycle presents an opportunity to invest and position for potential gains. It’s crucial to conduct research and analysis during this time to identify the most promising possible opportunities.
(2) After leaving the accumulation phase, the market enters re-accumulation, marked by a pump and a consolidation phase. Currently, we’re likely experiencing the pump phase into re-accumulation, presenting an opportunity for traders to take advantage of rising prices. In the last cycle, this move happened between 3.2k and 14k, indicating potential for significant gains.
During accumulation, buyers purchase Bitcoin at lower prices, intending to sell for profit later. In re-accumulation, they take profits and look to buy back at lower prices to increase holdings before the post-halving bull run.
If we follow the pattern of the last two cycles, the current move could resemble a run-up to $48k, hitting key weekly OBs and 0.618, as we did in the 2019 rally. Then we may see a pullback and sideways chop until the halving, which could occur in early April or late April 2024, depending on the Hash rate. It’s important to keep an eye on the Hash rate and be ready to adjust trading strategies accordingly.
Post-halving, the reduced supply and price increase towards production cost typically triggers the start of a new bull market. This is because the price of a commodity tends to move towards its production cost. If the price falls below cost, production slows down, which can lead to a reduction in supply and a subsequent price increase.
Satoshi Nakamoto once said, “The cost of production typically dictates the price of a commodity. When the price falls below production cost, production slows down, and when it rises above production cost, more can be produced and sold for profit. This increase in production can drive up the production cost and push the price back down.
Last cycle, I successfully used the halving map to sell the top in November 2021. By measuring the number of days from the halving to the 2017 ATH, which was 525 days, I could predict that the current cycle was at 540 days, making it the longest cycle ever.
We were showing bearish PA movements SFP of range highs weekly and monthly rejections, and clear along with FED switching to QT after a high inflation print which that CPI date was actually the ATH to the hour.
When the market sentiment was bullish for a blow-off move to 240k-400k, I noticed the bearish price action in Q4 of the latest stages of the bull run. After analyzing the situation, I realized that we were running out of time to make that move. Additionally, the Federal Reserve’s pivot to QT and SPX in clear distribution indicated that the run was most likely over.
The bear market that followed the 2017 peak lasted for a full year until the market bottomed out around the same time as the previous cycle, almost exactly 1 year later. This time around, we saw a similar pattern with the top in November 2021 aligning with the peak of the previous cycle.
The market bottomed on November 10th, 2022, which happened to be a CPI date, just like in the last cycle.
During bear markets, Bitcoin tends to pull back to meet the weekly 200MA. However, this current bear market is unique as it is the first time in Bitcoin’s history that we have traded below the weekly 200MA for a significant amount of time.
I hope this discussion on the BTC halving cycle and its impact on the crypto market has been helpful. In the coming week, I’ll be sharing more articles that explore the altcoin cycles in relation to the BTC halving, as well as some strategies for potentially maximizing your BTC holdings throughout the 4-year cycle. Stay tuned!