The Bitcoin halving is arguably the most important event in the cryptocurrency industry, taking place every roughly four years (210,000 blocks). It aims to reduce the speed at which new BTC is being produced, which essentially reduces the pre-programmed inflation rates and ensures that Bitcoin mining will continue for many more years, even though more than 90% of the total supply has already been mined.
The next such event is scheduled to take place in early April 2024. Given the asset’s history of going on wild rides before, during, and after each of its previous three halvings, crypto analysts have begun speculating on what could transpire in the next year or so.
First Phases: Pumps and Dumps
Whether it’s the hype around the upcoming halving or the potential approval of the US’ first spot Bitcoin ETF (or maybe both), the fact is that BTC’s price has been on the run for the past few months. Just earlier this weekend, the primary cryptocurrency charted a 19-month peak at almost $45,000. Quite an impressive number, given the fact that the asset started the new year at around $17,000.
Popular crypto analyst going by the X handle Rekt Capital indicated that there might be retracements in BTC’s near future, but they could result in a “fantastic Return on Investment” should investors capitalize on them.
By relying on historical data, Rekt Capital suggested that BTC sees another rally approximately 60 days before the halving. This is typically followed by a “pre-halving retrace,” which takes place around the event. In 2016, BTC dropped by just under 40% and by 20% four years later.
5 Phases of The Bitcoin Halving
1. Pre-Halving period
Approximately 4.5 months remain until the Bitcoin Halving in April 2024
Historically, any deeper retraces that occur during this period tend to generate fantastic Return On Investment for investors in the several… pic.twitter.com/FxkOyEtXJT
— Rekt Capital (@rektcapital) December 6, 2023
Reaccumulation and Parabolic Trend
Savvy investors use the aforementioned “pre-halving retracement” to stack Sats, but others’ faith might be quite different, Rekt Capital warned:
“Many investors get shaken-out in this stage due to boredom, impatience, and disappointment with lack of major results in their BTC investment in the immediate aftermath of the Halving.”
Once the dust settles, the halving is history, and the reaccumulation phase is complete, comes the sweetest part – the parabolic price increases.
Of course, history is no indication of future price movements. Nevertheless, BTC indeed skyrocketed months after each of the previous halvings and tapped new all-time highs within a year and a half. The last such example was in late 2021, when it touched $69,000. For reference, the third halving took place in May 2020.