The Bitcoin halving event happening next year marks a momentous occasion in the cryptocurrency world, driving enthusiasts and investors alike to delve deep into the intricacies of its impact on the market. To grasp the full spectrum of this phenomenon, we embark on a journey through five distinct phases that have historically characterized the Bitcoin halving cycle.
According to the data gathered by Rekt Capital, there are five phases that Bitcoin has to navigate through during each halving event, and these are the following:
Phase 1: The Pre-Halving Period
In the lead-up to a Bitcoin halving event, the market often experiences a period of anticipation and uncertainty. Typically occurring approximately 140 days before the halving itself, this phase has witnessed significant price retracements in the past.
In the years 2015 and 2019, Bitcoin retraced by -24% and -38%, respectively, during this timeframe. Such corrections raise questions about the future price trajectory, with some speculating the possibility of a -30% drop, revisiting levels around $20,000.
Phase 2: Pre-Halving Rally
As the halving draws nearer, a Pre-Halving rally ensues, approximately 60 days prior to the event. During this period, investors are often driven by the “Buy the Hype, Sell the News” mentality.
Excitement builds, and buying activity intensifies in anticipation of the halving event itself.
Phase 3: Pre-Halving Retrace
The actual Bitcoin halving event triggers a phase of retraction known as the Pre-Halving retrace. This phase, characterized by a dark blue circle on the price chart, has seen notable retracements in previous cycles.
In 2016, the Pre-Halving retrace reached -38%, while in 2020, it was -20%. This retracement often leaves investors questioning whether the halving truly has a bullish impact on Bitcoin’s price.
Phase 4: Re-Accumulation
Following the Pre-Halving retrace, Bitcoin enters a phase of re-accumulation, marked by a distinct red segment on the chart. This stage is particularly challenging for investors, as boredom, impatience, and disappointment may set in due to the lack of immediate price surges following the halving.
It’s during this period that many investors may be tempted to exit their positions prematurely.
Phase 5: Parabolic Uptrend
The culmination of the Bitcoin halving cycle is the Parabolic Uptrend phase. This is when Bitcoin finally breaks out of the re-accumulation zone and enters a period of accelerated growth.
At this moment, the digital asset normally heads towards new All-Time Highs. During this phase, the cryptocurrency market experiences euphoria and excitement as prices surge to unprecedented levels. It could also trigger FOMO for investors.
Overall, the Bitcoin halving journey is a complex and multi-faceted process that unfolds over several distinct phases. From the initial anticipation and retracement to the Pre-Halving rally and subsequent re-accumulation, each phase brings its own set of challenges and opportunities for investors.
It’s essential for those involved in the cryptocurrency space to understand these Bitcoin halving phases and the historical context behind them to make informed decisions and navigate the volatile crypto market successfully.
Giancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines.
In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013.
Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc., the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO’s core management team, contributing to strategic planning and business development endeavors.