Bitcoin Halving Events and Price Action: Analyzing Past Cycles and Future Trends
Bitcoin has experienced three halving events since its inception in 2009, with the most recent one taking place in May 2020. A halving event occurs every 210,000 blocks, which is roughly every four years, and it reduces the block reward that miners receive by 50%. This event has a significant impact on the supply and demand dynamics of Bitcoin and, as a result, its price.
In this analysis, we will focus on analyzing Bitcoin’s price action based on its halving events and how its overall trend demonstrates a higher probability of an upside in the coming days, considering the past price action history of previous cycles.
Cycle 1: November 28, 2012, to July 9, 2016
Bitcoin’s first halving event took place on November 28, 2012, and marked the beginning of the first cycle. At that time, Bitcoin’s price was around $12.25, and after the halving event, it steadily rose over the next few months, reaching a peak of $260 on April 9, 2013. However, it experienced a significant correction soon after, with its price falling to around $50 in the following weeks. The price then gradually recovered and remained relatively stable until the next halving event.
The second halving event took place on July 9, 2016, marking the end of the first cycle. The price of Bitcoin was around $650 at that time and, after the halving event, it started to climb steadily, reaching an all-time high of $20,000 in December 2017. The price then experienced a significant correction and entered a bear market that lasted until the end of 2018.
Cycle 2: July 9, 2016, to May 11, 2020
The second cycle began with the second halving event on July 9, 2016, and lasted until the third halving event on May 11, 2020. The price of Bitcoin was around $650 at the start of this cycle, and it experienced a steady climb over the next two years, reaching an all-time high of $20,000 in December 2017. The price then experienced a significant correction and entered a bear market that lasted until the end of 2018.
The price remained relatively stable until mid-2019 when it started to climb again, reaching a peak of $13,000 in July 2019. However, the price then experienced another correction and entered a bear market that lasted until the third halving event on May 11, 2020. After the halving event, the price started to climb again, reaching a new all-time high of $64,863 on April 14, 2021.
Cycle 3: May 11, 2020, to present
The third cycle began with the third halving event on May 11, 2020, and is currently ongoing. The price of Bitcoin was around $8,500 at the start of this cycle, and it experienced a steady climb over the next few months, reaching a peak of $64,863 on April 14, 2021. The price then experienced a significant correction and entered a bear market that lasted until late 2022.
However, the price has started to slowly climb again since then, and it is currently trading at around $23,000. The price is still well below its all-time high, but the overall trend demonstrates a higher probability of an upside in the coming days, considering the past price action history of previous cycles. If Bitcoin can continue to trade above the 200 moving averages, as it has in the past historically as well, we could potentially see a promising move up to the $30,000 — $45,000 range.
The chart above displays two graphs, one showing the price of Bitcoin from 2010 to 2023 in a logarithmic scale, and the other displaying the volume of online mentions of Bitcoin. The chart is interesting in that it suggests a correlation between public interest in Bitcoin and its price.
The graph showing the price of Bitcoin demonstrates the significant growth that Bitcoin has experienced since its inception in 2010. The price started off very low, with a single Bitcoin being worth less than a penny in 2010. However, over time, the price increased significantly, reaching a peak of around $65,000 in 2021 before falling back down to around $40,000 in 2022.
The graph showing the volume of online mentions of Bitcoin is also worth noting. It shows that as Bitcoin’s price increased, so did the volume of online mentions. This suggests that there is a correlation between public interest in Bitcoin and its price.
The chart also suggests that there is a relationship between the volume of online mentions and the best times to buy or sell Bitcoin. According to the chart, historically, when the mention volume was near or above 14 million, it was a good time to sell Bitcoin, while times when the mention volume was near or below 4 million, it was a good time to buy.
The chart above also presents an interesting observation. In 2016, during the previous halving event, the online mentions of Bitcoin were not significant enough to have a noticeable impact on its price. However, during the 2020 halving event, we can see a significant increase in the online mentions of Bitcoin, which had a substantial impact on its price increase.
The saying ‘buy the rumor sell the news’ is easier said than done. This saying, in essence, pierces the essence of how the general public thinks. Because it’s so difficult to figure out inflection points based on responses from the general public, this analysis provides a quantitative approach to how online mention volumes can be used as an indicator for market opportunities.
Analyst: Kevin Lee @ Catalyze Research
