The focus of the crypto community has now turned to the halving event, a cyclical event that halves the Bitcoin market supply, reducing the mining reward from 6.25 BTC per block to 3.125 BTC per block, which will take place in April 2024.
All Eyes on the Halving Event
Changpeng Zhao, the CEO of the cryptocurrency exchange Binance, shared a countdown to the next halving event to remind everyone that only 135 days are left.
Historically, the Bitcoin halving event has been associated with a surge in price due to the supply-demand dynamics that follow the halving of block rewards amidst increasing demand.
During the last halving in May 2020, the price of Bitcoin traded below $10,000 almost two months before the event, but then experienced a significant increase. The price surpassed the previous all-time high of $17,000 and reached over $69,000 after the halving event.
What to Expect from the Halving Event?
An analyst known as Rekt Capital outlined different stages of the Bitcoin bull cycle using the letter X. According to the analyst, investors tend to sell the news before the halving event, leading to a rally in the weeks leading up to it. However, there is usually a pullback during the actual halving. In 2016, the pullback before the halving event resulted in a 38% correction, while this time it was around 20%.
After the pullback, there is a consolidation period where Bitcoin accumulates before making new highs. Some investors may become impatient during this phase and worry about the lack of immediate results after the halving event.
Following the accumulation phase, Bitcoin enters a parabolic wave, surging to new all-time highs. It is during this stage that Bitcoin can reach unprecedented levels.
