Crypto expert RJ Fulton says Bitcoin halvings provide reliable benchmarks for evaluating price action. Meanwhile, he notes that more than 70% price drops are nothing new for cryptocurrencies. He also states that Bitcoin’s price action today follows past trends. RJ Fulton reviews the leading cryptocurrency and assesses whether it’s time to buy it.
“Leading cryptocurrency is doing what it has done in the past”
For the Bitcoin novice, the drop in 2022 is also a reminder that the price of the digital currency can fall as quickly as it rises. What if I told you that it does exactly what Bitcoin has done in the past? Essentially, we’re on the exact schedule. Better yet, what if I told you that the next few months could be one of the best times to buy Bitcoin? To better understand why I believe this, we need to examine one of the unique features of Bitcoin that sets it apart from many other cryptocurrencies.
Approximately every four years, or after 210,000 blocks are mined, the Bitcoin block reward is halved in an event known as halving. When Bitcoin miners successfully mine a block, they are rewarded with a certain amount of Bitcoin. This is the primary mechanism for the creation of new Bitcoins. However, the process also slows the growth in the supply of new cryptocurrencies.
halving trends
Bitcoin miners are now rewarded with 6,125 Bitcoins for creating a new block. Before the last halving in May 2020, the reward was 12.5 Bitcoin. And before that 210,000 blocks was 25. The previous 210,000 blocks, the reward was exactly 50 Bitcoins. Among other features such as elite security and decentralization, halving is one of the most fundamental features of Bitcoin.
What attracts investors more is the price dynamics during the halving and in the interim period. When we plot the price of Bitcoin and plot the halving dates on the same chart, a few things become clear. Based on data from the last four halvings, Bitcoin’s price bottoms out on average about 1.5 years after the next halving. With a little math, since we know that Bitcoin halves every 210,000 blocks, we know that the next Bitcoin halving should occur around May 2024 or 1.5 years from now.
These are just average values. It also does not mean that the future will evolve just like the past. But the data shows that the current bear market that Bitcoin finds itself in is nothing out of the ordinary. So, drops of 70%, 80% or even 90% are normal during cryptocurrency winters. If we take a closer look at Bitcoin’s price action around halvings, another phenomenon emerges. About a year and a half after the halving, Bitcoin tends to hit an all-time high.
What do the numbers say for the leading cryptocurrency?
Some numbers will probably help so you don’t have to take my word for it. Let’s take a look at the first halving, which took place in late November 2012. A little over a year before the halving, Bitcoin hit its all-time high of around $30. However, it later bottomed out, down more than 90% to just $2.50. Almost exactly one year after the halving, it reached an all-time high (ATH). Thus, it surpassed $1,100 in November 2013.
Bitcoin slid from this high to just $177 by mid-January 2015, roughly 1.5 years before the next halving in July 2016. It reached an all-time high of $20,000 in December 2017. Bitcoin has been down for most of 2018 after hitting $20,000. The worst came in December 2018, when Bitcoin dropped to just $3,200. Again, this bottom was about 18 months away from the next halving scheduled for May 2020. And like clockwork, the crypto hit an all-time high, reaching $69,000 in November 2021. And this is 1.5 years after the last halving.
Is it the ideal time to buy Bitcoin?
Today we are in a very similar position to past halving cycles. As you follow on Kriptokoin.com, it has been almost a year and a half since the ATH level. Also, Bitcoin is down about 70%, well in line with past trends. To the delight of investors, we are roughly 1.5 years away from the next halving scheduled for May 2024.
Historically, these times have been one of the most opportunistic to buy Bitcoin, when downside risk is minimized and upside risk is maximized. Historical data shows that traders buying today are in a position to reap the biggest rewards as long as they hold for a year and a half after the May 2024 halving.
But that means you have to wait until at least the end of 2025. This may seem like a long road. However, investing with a long-term perspective is one of the most important ways to ensure your portfolio is a success. Will Bitcoin follow the course of the past years? We cannot say this for sure. However, I will continue to believe the data until proven wrong.
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