- Bitcoin has been maintaining an upward trend within a symmetrical triangle since the beginning of the year. Additionally, recent rejections from recent highs have supported the notion of accumulation within this pattern.
- Rekt Capital, a popular analyst, discusses the five stages of the Bitcoin halving and claims that the price has only entered the pre-halving stage.
- The primary purpose of the Bitcoin halving is to reduce the Bitcoin supply in a controlled manner. Each halving reduces the rate at which miners earn new Bitcoins, meaning new Bitcoins are produced more slowly.
Bitcoin is set to enter a critical Halving process in April 2024. How do the stages progress during the Halving period? Let’s take a closer look!
Bitcoin’s Halving Stages and Effects
Bitcoin has been going through a prolonged accumulation stage and maintaining a high short-term trend. Although minor price increases have been misunderstood as early signs of a bull run, major support shows some differences. The BTC price is positioning itself to create new highs and rise in the coming days as it has now entered the “pre-halving” period if historical trading works well.
Since the beginning of the year, Bitcoin has been maintaining an upward trend within a symmetrical triangle. Additionally, rejections from recent highs have supported the notion of accumulation within this pattern. If previous historical trading patterns hold, it is predicted that after 60 to 70 days of accumulation, the price will rise.
Rekt Capital, a popular analyst, talks about the five stages of the “Bitcoin halving” and claims that the price has only entered the pre-halving stage. The analyst explains the impact on the price during this period as follows:
- Pre-Halving Period: If this occurs within a few days, the analyst claims that the retracement could continue for the next 140 days. In the past, the price saw a drop of approximately 24% (2015) and 38% (2019) around 200 days before the halving. Therefore, a 30% drop could push the price to $20,000.
- Pre-Halving Rise: The last 60 days before the halving are referred to as a pre-halving rally, where investors may experience a rise as they aim to “buy the news.”
- Pre-Halving Retracement: This period is typically expected to occur during the halving event and forces investors to consider whether the halving event is a bullish catalyst. Previously, BTC saw a drop of 38% in 2016 and 20% in 2020 during this period.
- Re-Accumulation: Following the pre-halving retracement, extended multi-month accumulation begins, and many investors who did not see significant results in their BTC investments get frustrated, impatient, and disappointed, leading to selling pressure.
- Parabolic Rise: When the BTC price begins to exit the re-accumulation phase, it rapidly experiences growth towards new all-time highs.
According to the analyst, Bitcoin’s price is closer to entering the pre-halving period and may experience a deep retracement soon.
What Is Bitcoin Halving?
Bitcoin is a cryptocurrency with a limited supply. In total, 21 million Bitcoins can be produced, and these Bitcoins are created through a process called mining. However, the rate at which Bitcoin is created decreases over time. Every 210,000 blocks (approximately every four years), the Bitcoin reward is halved. This event is called “Bitcoin halving.”
The primary purpose of Bitcoin halving is to reduce the Bitcoin supply in a controlled manner. Each halving reduces the rate at which miners earn new Bitcoins, meaning new Bitcoins are produced more slowly. This increases the scarcity and value of Bitcoin while preventing inflation. The halving event supports the deflationary feature designed into Bitcoin.
One significant consequence of Bitcoin halving is that mining activities become less profitable. When miners receive fewer rewards, they must allocate more effort and resources to mining. As a result, mining competition increases after each halving, and less efficient miners exit the market.
In conclusion, Bitcoin halving is an important event that affects the fundamental economic dynamics of Bitcoin and supports its deflationary feature.
