BITCOIN HALVING

Live countdown clock to the upcoming Bitcoin Halving – a game-changing event that could send prices soaring!

What is the Bitcoin Halving?

The Bitcoin halving is an event that occurs approximately every four years, or more specifically, every 210,000 blocks. During the halving, the reward for successfully mining a new Bitcoin block is reduced by 50%. This mechanism is a part of Bitcoin’s deflationary monetary policy, which is designed to control the supply of new bitcoins entering the market and ultimately cap the total number of bitcoins at 21 million.

There have been three Bitcoin halving events to date:

1First halving: November 28, 2012 – The block reward was reduced from 50 to 25 bitcoins per block.
Second halving: July 9, 2016 – The block reward was reduced from 25 to 12.5 bitcoins per block.
Third halving: May 11, 2020 – The block reward was reduced from 12.5 to 6.25 bitcoins per block.

The countdown to the next halving is displayed on the clock above.

Why does the Halving effect Bitcoins Price?

Historically, Bitcoin halvings have been associated with significant price increases in the months before & following the event.

Here’s why the price increases:

1. Decreased supply: When the Bitcoin halving occurs, the rate at which new Bitcoins are created is reduced by 50%. This means that there will be fewer new coins entering the market, which can lead to a decrease in the overall supply. If demand remains constant, a decrease in supply may result in an increase in the price.

2. Anticipation and speculation: As the halving event approaches, market participants often anticipate the impact of the reduced supply on the price of Bitcoin. This anticipation can result in increased buying activity, driving the price up even before the halving occurs. Speculation around the halving event can also lead to price volatility.

3. Miner profitability: The halving reduces the mining reward, which can impact the profitability of mining operations. As the reduction in rewards makes mining less profitable, miners have to adjust their selling price to higher levels to cover their costs although some miners may choose to shut down their operations which can lead to a reduction in the overall mining power of the network and potentially affect transaction processing times and fees.

The Three Stages of the Halving Cycle: Parabolic Advance, Large Drawdown & Consolidation

The Three Stages of the Halving Cycle

The Bitcoin halving cycle has three stages that interact with the cryptocurrency’s price, supply issuance, and mining dynamics. These stages are the Parabolic Advance, Large Drawdown, and Consolidation.

Stage 1: Parabolic Advance (first 70,000 blocks after halving) is characterized by a massive disequilibrium between available Bitcoin supply and market demand, fueled by a 50% reduction in new supply issuance following a halving event. This stage sees inefficient mining operations purged, and efficient miners benefit from reduced sell pressure and increased market share. The parabolic price increase and media attention attract speculators and investors, creating a buying frenzy.

Stage 2: Large Drawdown (70,000 to 140,000 blocks after halving) occurs as the exponential rise in Bitcoin price causes the mining industry to become extremely competitive. This leads to increased sell pressure from miners with higher expenses and reduced profit margins. Despite rising demand, the price cannot be sustained, resulting in a protracted drawdown. The price floor is eventually found multiples above the previous cycle high.

Stage 3: Consolidation (last 70,000 blocks of the halving cycle) involves the market attempting to find a new equilibrium between the bottom set around 140,000 blocks after halving and the all-time high set around 70,000 blocks following the halving. Hash rate continues to rise as new miners plug in, driven by deep-pocketed and sophisticated investors with access to cheap energy sources.

Using Data from previous Halving events to find Bitcoin Tops

Looking at Bitcoin’s price peaks following a halving event, we can observe general trends from the previous halvings. At this point, it’s safe to assume a bull run follows every Bitcoin halving cycle with a Parabolic Uptrend in the first 0-70,000 Blocks Post Halving.

1. First halving (November 28, 2012): The price of Bitcoin started to increase significantly after & reached a peak of around $1,163 on December 17, 2013. This peak occurred approximately 384 days after the halving event.

2. Second halving (July 9, 2016): The price of Bitcoin began rising in the months following the halving and reached its peak on December 17, 2017, when it touched an all-time high of around $19,783. This peak took place approximately 526 days after the halving event.

3. Third halving (May 11, 2020): After this halving, the price of Bitcoin started to climb, eventually reaching its peak on April 14, 2021, at around $64,800. This peak happened about 338 days after the halving.

It’s important to note that these peaks might not be solely attributable to the halving events, as numerous factors can influence the price of Bitcoin, including market sentiment, global economic conditions, and regulatory developments.

As a rule of thumb people are considering 365 days post halving as general guide of a possible Bitcoin Cycle Top

The 365 day rule to help find a general Bitcoin Top

The Bearish Part of the Cycle

While it’s tempting to envision the halving as a surefire catalyst for an immediate Bitcoin boom, remember that this uptick is often fleeting. Market forces have a way of self-correcting when the fervor of a buying spree subsides. If we look back, we’ll notice that bearish trends tend to emerge after bull runs, sometimes persisting for a full year. Typically, Bitcoin’s value dips significantly during these periods, only resuming its ascent a few months before the next halving cycle kicks off.

Determining the exact bottom of the Bitcoin price before each halving event is challenging, but we can look at approximate low points close to each event:

First halving (November 28, 2012): Prior to the first halving, Bitcoin reached a low of around $2 in late 2011. Since the exact bottom date is difficult to determine, let’s consider January 1, 2012, as a reference point. In this case, the bottom occurred approximately 332 days before the first halving event.

Second halving (July 9, 2016): Before the second halving, Bitcoin reached a low of around $200 in mid-January 2015. If we use January 15, 2015, as a reference point, the bottom occurred approximately 541 days before the second halving event.

Third halving (May 11, 2020): Prior to the third halving, Bitcoin reached a low of around $3,200 in mid-December 2018. If we use December 15, 2018, as a reference point, the bottom occurred approximately 513 days before the third halving event.

These are the approximate number of days before each halving event that Bitcoin prices bottomed.