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Since the halving of Bitcoin will take place in just one month, on May 11, 2020, the crypto world has long expected the valuation of the first cryptocurrency to skyrocket. However, the catastrophic sell-off last month questions this theory.
According to historical data, however, the momentum of the Bitcoin price is currently at the same level as it was before the last halving and before the hyp bubble was inflated.
Calculation of the cryptocycle: Bitcoin in step with price development with previous halving
The cryptocurrency asset class has suffered from brutal downtrends and bear markets for two full years. Most cryptocurrencies suffered price drops of more than 90%.
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From high to low, bitcoin price fell 84% from its all-time high of $ 20,000 to its current low of $ 3,200.
If you look at the Bitcoin price charts, the driver for the massive bull run seems to be the upcoming halving of the asset.
Each halving reduces the block reward that miners receive for validating the blockchain network by 50%. The theory is that the reduced supply that comes onto the market will eventually reduce the sales pressure on the miners, leading to an imbalance between supply and demand. That should make the rating skyrocket.
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After the last two halves, shown as red dotted vertical lines in the price chart above, the Bitcoin price exploded in absolute value and didn’t stop until the next big peak was reached. Then the cycle started again.
But the recent sell-off given the impending recession and the dramatic impact of the pandemic on the economy has caused all liquid assets to collapse, including bitcoin, gold, the stock market, and more.
He caused even the strongest supporters of the emerging technology and asset class to believe that the experiment was over and fear that these assets in the delusion of sales and cash demand would soon be zeroed out.
However, the recent collapse has actually brought Bitcoin back to more realistic valuations and brought it back perfectly to the dynamics of the previous halving. This signals that the legendary crypto bull run after halving is not out of the realm of the impossible.
If one analyzes the relative price development in the last halving up to the start of the bull run at that time, it agrees with the current price development.
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From the bottom of the bubble from 2017 to 2018, up to where Bitcoin is currently traded, a profit of more than 120% has been recorded.
During the same period in the last cycle and just a month before the halving at that time, the Bitcoin price was also 120% above the low set 18 months earlier.
What happened after Bitcoin and crypto entered the financial world as a financial investment? The Bitcoin price rose from under $ 500 to over $ 5,000 before the public got wind of it. FOMO later raised the course to $ 20,000.
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Now the Bitcoin price is back at the peak of its financial possibilities. If things went exactly as they did then, the next peak would temporarily trade over $ 300,000.
As exciting as it may sound, it would be unrealistic that the Bitcoin price will develop as well as in previous cycles, as each new cycle has resulted in decreasing block reward returns. Regardless, it’s probably still early enough to get started now to take advantage of the next crypto bubble that hasn’t even started yet.
Source: NewsBTC
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