💥 Halving. What now? 🚀🔥
Hello my dear investor, trader, reader. I hope you are doing well. In this short article I go through a bit of the halving process and its impact on the market.
This article is meant for the people who feel stressed about the current moment we are witnessing, and would like to know more about what to expect from this event.
1. What is the Halving?
What happens when we print a lot of a currency without any restriction? You're likely used to the concept of inflation already, and that's the answer: inflation. The currency loses value.
Bitcoin has a limited supply. It cannot be mined forever. The cap is 21 million and it should be impossible for more Bitcoins to exist¹. That's good. When there are a few diamonds in the world, they are more valuable when compared to other objects found everywhere.
Then, why not to simply release all 21 million tokens by $BTC 's introduction? Satoshi possibly and very cleverly predicted that Hoarders (whales and orcas, also corporations) would have bought most of the BTC supply back then, which would have greatly impaired BTC's growth. If a hoarder were to have 99% of all BTC, it wouldn't be as much valued as it is, and it would have become centralized².
In order for Bitcoin to survive and keep being mined for a long time, the event know as "Halving" has to occur, and in fact, after every 210,000 blocks, a halving event occurs³. When it does happen, the amount of BTC introduced to the market at any given period of time is reduced by half. This time, the reward will drop from 6.25 to 3.125¹,³.
Since this article focuses on the market analysis, a proper explanation on Bitcoin Mining is beyond the scope of this post, and it is recommended that the reader seeks for this information elsewhere.
2. What can be expected ahead? 👀⚖️
In order to make an educated guess on what is going to happen in the future, let's have a look at the past.
2.1. Peeking the past: 2020's Halving
Now, consider the following piece, which ranges between November 2019 and April 2020.
It doesn't tell much, then let me add an important info. This is showing 2020's Halving Event. Take a look from this perspective.
In this perspective, we can see clearly that as the Halving Day approaches, BTC first experiences a "Bull Market-like" period, represented in the green rectangle, then a "Bear Market-like" period, represented in purple.
It's not so different from what we are experiencing right now.
As we can see, BTC is following a very similar pattern. It has experienced a Bull Market-Like Period, starting about 60 days before halving, and now is experiencing a Bear Market-Like Period.
Now, let's analyze image IV accounting for % increases and decreases, both for the green rectangle and for the purple rectangle.
Within the Green Rectangle, prices increased from about $7400 to about $10700 in a 22% pump, then 20%, then 15%, increasing the overall value by about 44.6%, when accounting for the small dumps in between.
In a Bull Market, the overall price is going up with dumps in between.
Now, as we shift our attention to the Purple Rectangle, we see a Bear Market-Like period, where the price went from $10700 all the way down to about $3750, in three small dumps followed by a 40% crash (a day after the Halving⁵). These small dumps followed by a crash reduced BTC's price by a whooping 65%!
In a Bear Market, the overall price is going down with small pumps in between.
Right after the purple rectangle, right after March 12th 2020, we see recovery, and then finally, the Bull Market has begun.
2.2. Understanding the Present
Let's get back to what we are experiencing right now.
I ask thee, reader. What do you think awaits us ahead?
People will say "this time will be different", but will it really? I must alert you: these people existed in the past. They said the same things: "this time it will be different", but history repeats itself.
History happens twice upon a time. - Lyrica Live, "Gensokyo Millennium ~ History of the Moon"
So, here's an educated guess for you, with the % increases and decreases. They are not to be taken literally. Arbitrary values are in light blue color.
Shall things procede similarly to 2020's Halving, we should be thus in a Bear Market-Like period, that will last until the halving day. If things really procede similarly, then by the halving day, or the day after it, we may be met with a sudden decrease in BTC's value.
3. Conclusions
With this article, we can acknowledge that the moment we are currently immerged inside is likely to be a Bear Market-Like period, and that it should last until the day of the BTC halving, or until a few days after it.
We can also acknowledge the similarities between 2020's halving and 2024's halving, understanding the common pattern of a Bull Market-Like period, followed by a pre-halving Bear Market-Like time gap, then finally, a Bull Market.
Indirectly, inference can be made that other Altcoins like Solana, Cardano, BNB, XRP and ETH; as well as Memecoins like $BOME , $PEPE , SHIB, BONK, WIF and others, will also undergo a similar Bear Market-Like period, and that their price is fated to fall until the halving occurs.
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📝 References
Coinbase: "What is Bitcoin Halving?"On YouTube: CoinMarketCap Channel - "Bitcoin Halvings, What they are, why they happen, and why you should care" CoinMarketCap: "Bitcoin Halving Explained" Binance BTC Chart, 1 day rangeBinance: "Bitcoin Halving: When is the next One?"
