BTC halving in a year. What awaits us?
Will this be the start of the next bull market? We look at the current situation and evaluate the prospects for BTC at $1 million in the next cycle.
??What is halving?
This is an event that occurs roughly every 4 years. As a result of which, the reward of miners for the extracted block is halved. This reduces the rate of creation of new coins and the total supply, which makes BTC more scarce.
??Events after the halving
Each halving led to a significant bull run in the following months:
November 2012 - growth by ~9000%, duration ~13 months.
July 2016 — growth by ~2900%, duration ~18 months.
May 2020 — growth by ~1200%, duration ~19 months.
It is noteworthy that with each cycle, the percentage of growth decreased. The duration of each cycle is different, but the pattern remains unchanged.
??Altcoin season
After each BTC halving, alts also grew significantly. This is likely due to increased interest in the wider crypto market, as well as investors looking for higher potential returns in alternative assets.
Each halving and subsequent bull-calf attracted more and more investors and developers to the crypt, which led to an increase in the overall market capitalization of the crypt, an increase in innovation and the development of various projects.
Important note: the future halving will occur around the time when the government is expected to introduce additional clarity on regulation and reduce the risks associated with investing in crypto.
??Cryptocurrency cycles
They usually consist of a bull and a bear, with halvings acting as catalysts for these cycles. They can be driven by factors such as market sentiment, technological advances and macroeconomic developments.
Each cycle consists of:
- Accumulation: Investors accumulate assets at low prices.
- Revaluation: prices rise, attracting more investors.
Distribution: early investors sell, causing prices to fall.
- Decline: prices continue to fall, leading to a new phase of accumulation.
??Current situation
Now we are on the bear. Let's take a look at the current activity on the network.
Miner activity:
Miners play a major role in the BTC network, providing security and processing transactions. In each cycle, the mining hashrate only increased, indicating more mining power (either more miners or an upgrade of existing hardware).
Number of active addresses:
Increased sharply during the 2021 bull market. But even during the bear period, active wallets are still gradually increasing, which may mean that more people are hoarding funds at lower prices.
??Final Thoughts
It's not for us to guess if BTC will actually reach the new ATH, but all current indicators seem to be in line with this.
There are also a number of reasons why people will accumulate BTC in the near future:
• The collapse of the big banks in America - the credibility of the banks is declining.
• CBDC-BTC opposition could be the only globally accepted solution.
• Ahead of clarity on regulation in the near future.
As the crypto market matures, the halving dynamics may change. Technological advances, changes in market structure, and mass additions may affect the outcome of future halvings and market cycles.
