Comparing Bitcoin halving cycles. When’s the price top due this time around?

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Com­par­ing the devel­op­ments of the pre­vi­ous Bit­coin halv­ing cycles to the cur­rent one gives some per­spec­tive on whether they are get­ting longer. Length­en­ing of halv­ing cycles would imply that the Bit­coin price top has been delayed this time around.

Analy­sis, advi­so­ry, and mon­ey man­age­ment com­pa­ny Quan­tum Eco­nom­ics recent­ly explored if bull­ish price pre­dic­tions, such as Bit­coin reach­ing $100.000 before the end of 2021, were sim­ply a few months off, as well as when could they materialize.

No market top thus far

In rough­ly four-year inter­vals, with every 210.000 blocks mined, the block reward giv­en to Bit­coin min­ers for pro­cess­ing trans­ac­tions gets cut in half, and will con­tin­ue halv­ing until the block reward becomes 0 (approx­i­mate­ly by the year 2140). 

Bit­coin last halved on May 11, 2020, result­ing in a block reward of 6.25 BTC.

And while ear­li­er halv­ings have cor­re­lat­ed with intense boom and bust cycles, which end­ed with high­er prices than pri­or to the event, inspect­ed from the point of price action, the cur­rent cycle pro­vides a puz­zling contrast–with no mar­ket top that stuck out thus far.

The per­cent­age change in Bit­coin price since the halv­ing event reveals that, despite a rel­a­tive­ly strong begin­ning, the cur­rent halv­ing cycle is under­per­form­ing the pre­vi­ous two.

All three halving cycles: Percentage change in Bitcoin price since the halving event (Quantum Economics)
All three halv­ing cycles: Per­cent­age change in Bit­coin price since the halv­ing event (Quan­tum Economics)

It had been out­per­form­ing the sec­ond halv­ing cycle per­cent­age-wise up until day 391, but since then the price action has been rather disappointing.

“This cycle is either dif­fer­ent from all the oth­er ones, or we have yet to see a clear cycle top like we did dur­ing pre­vi­ous cycles,” accord­ing to Jan Wüsten­feld, an on-chain ana­lyst for Quan­tum Eco­nom­ics, who inter­prets this as an indi­ca­tion that “this cycle might not be out of fuel.”

Lengthening of halving cycles

The ana­lyst fur­ther inspect­ed rel­e­vant sta­tis­tics from all three halv­ing cycles, includ­ing some data for the peri­od before the first halv­ing cycle, which he called the ‘Gen­e­sis cycle.’

Summary statistics: Genesis cycle, and halving cycles (Quantum Economics)
Sum­ma­ry sta­tis­tics: Gen­e­sis cycle, and halv­ing cycles (Quan­tum Economics)

As shown in the table, in the first cycle, it took Bit­coin 367 days for its price to reach a new all-time high (ATH). Dur­ing the sec­ond cycle, this peri­od extend­ed to 527 days. 

With this in mind, the sec­ond cycle took sig­nif­i­cant­ly longer (44%) to climb to a fresh record.

“Since we know how many days it took in pre­vi­ous cycles for Bit­coin to reach a new cycle high, it is pos­si­ble to pre­dict when the dig­i­tal cur­ren­cy will reach a new zenith dur­ing its cur­rent cycle, as long as one of the pre­vi­ous cycles repeats itself,” accord­ing to the analyst.

Table showing hypothetical dates when the price of Bitcoin could reach an ATH (Quantum Economics)
Table show­ing hypo­thet­i­cal dates when the price of Bit­coin could reach an ATH (Quan­tum Economics)

If the first cycle sim­ply had repeat­ed itself, the price of Bit­coin would have reached a new ATH in May 2021, where­as, if the sec­ond cycle had repeat­ed, this would have hap­pened last year in October.

Rely­ing on the fact that the sec­ond cycle took 160 days longer than the first cycle for Bitcoin’s price to reach a cycle high, Wüsten­feld cre­at­ed a lin­ear trend.

Accord­ing to his pro­jec­tion, it would take the cur­rent halv­ing cycle 757 days to reach an ATH–timing it in June 2022, rough­ly five months from now.

Since Wüstenfeld’s pro­jec­tion relies upon a lin­ear trend that uses only two data points, it leaves sig­nif­i­cant room for error.

“What is more impor­tant than the exact tim­ing is that the cycle is poten­tial­ly length­en­ing, and we have not nec­es­sar­i­ly reached this cycle’s high,” the ana­lyst con­clud­ed, not­ing that the price of Bit­coin depends on a wide range of fac­tors not cov­ered in his analysis–most impor­tant­ly, devel­op­ments on the macro level.

How­ev­er, con­sid­er­ing indi­ca­tions that halv­ing cycles might be length­en­ing, and the fact that there has not been a clear price top in the cur­rent cycle so far, the pos­si­bil­i­ty that Bit­coin is due for a delayed ATH appears high­ly plausible.

One thing is cer­tain, with 120,589 blocks left and rough­ly 778 days to go before the next halv­ing event, there is still plen­ty of time for surprises. 

Post­ed In: Bit­coin, BTC Halv­ing

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