Bitcoin halvings have historically been a bullish event for price action. Each halving, a planned reduction in the block reward for Bitcoin miners, has marked the beginning of a new phase of price action for Bitcoin. The Bitcoin protocol induces a supply shock, with the supply of newly minted Bitcoin block rewards halved. Therefore, halving should mean that, if demand stays the same, the price will go up due to the scarcity of Bitcoin.
The fourth Bitcoin halving is approximately 70 days away. Here is what Bitcoin has done in the past
The chart around the first halving shows a price increase of 3% in the 70 days leading up to the event. This was followed by a substantial rise of 92% in the same period after the halving. This establishes the first halving as a catalyst for bullish momentum moving into the future.
In the second Bitcoin halving, the 70 days leading up to the halving saw a more impressive rally, with a BTC price surge of 46%. However, post-halving, BTC consolidated, with a drop of 8% exactly 70 days after the halving, indicating a more mixed market reaction.
The third halving presented a pre-halving increase of 20% exactly 70 days prior. Interestingly enough it coincided with the COVID black swan event which induced huge volatility into the Bitcoin and crypto market leading into the third halving, compared to the previous two halvings. However, 70 days after the third halving, Bitcoin’s price rose by 3%. Despite that, though, the price began to increase significantly the week after.
“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” – Peter Lynch
It is impossible to predict the future. Nevertheless, several factors suggest a strong potential for sustained upward momentum in Bitcoin’s value. These include:
Taking an average of the prior three halving movements, we can make a predictive analysis for the fourth halving. The historical average of pre-halving price increases is about 23%. This would set an ambitious target for the BTC price prior to the fourth halving of anywhere close to $55,000.
Furthermore, post-halving, the average BTC price increase has been around 28%. Applying this to current market conditions from the $55,000 target, as outlined in the fourth chart, suggests a post-halving target of $70,000 in June 2024. This presents a potentially optimistic short to medium term future for the price of Bitcoin.
While historical data can provide insights, it is important to understand that the cryptocurrency market is influenced by many external factors, and past performance is never indicative of future results. This predictive analysis should be one of many tools in an investor’s toolkit, and not a single roadmap to future price movements.
The information provided herein is for educational and informational purposes only and should not be construed as financial advice, investment recommendation, or an offer or solicitation to buy or sell any securities. Cryptocurrency investments are volatile and high risk in nature, do not invest more than you can afford to lose.