As the sun rises on a world two days away from the 2024 Bitcoin halving, there lingers an air of anticipation and uncertainty. The event’s outcome is unpredictable and could have significant ramifications that echo through the financial markets, with the price of Bitcoin at the center of these potential aftershocks. While we cannot predict the future with accuracy, we can paint a potential portrait of Bitcoin’s fate by examining its previous performance throughout similar moments of economic transition.
Since its inception in 2009, Bitcoin experienced three major halving events – significant milestones that had noteworthy impacts on its market. The inaugural Bitcoin halving unfurled its drama on November 28, 2012. The subtitles of the play were rewritten on July 9, 2016, and most recently, on May 11, 2020.
By exploring the ripple effects of the latter two events, the reach of Bitcoin’s adoption was widespread and its resonance was beginning to echo more loudly in the financial canyons. When the curtain fell on the 2016 halving event, Bitcoin was trading in the $650 region. However, in the aftermath of the halving, Bitcoin’s price saw an approximately 30% plunge, spiraling down to at least $460 before bouncing back.
Four years later, as 2020’s halving approached, Bitcoin danced just below the $10,000 mark. Following the halving, the currency experienced a price decrease, although the shock was less severe than the 2016 aftershock, with the rate of devaluation reaching around 15%.
These events have etched a pattern into the virtual stone of the cryptocurrency domain – that of Bitcoin prices falling post-halving. Despite a widely accepted notion that halving holds bullish implications, the precedent suggests a possible drop in Bitcoin’s price after the 2024 halving.
It’s worth mentioning that the degree of ‘post-halving price crash’ has been on the decline. Extending this trend into the future suggests that we might witness a price crash, but the severity of this crash could potentially be much milder. Given how the 2020 crash was half as harsh as it was in 2016, Bitcoin might be setting itself up for a relatively minor slump of 7-8%.
Examining historical trends opens up the possibility of deviation. Bitcoin has managed to defy well-established halving patterns, marking new highs prior to the halving – an unprecedented event. This deviation might hint at a complete break from the well-trodden path, suggesting the absence of a post-halving crash.
Similarly, the weeks leading up to the past two halving events were awash with green, painting a picture of optimism. Yet, 2024 paints a different picture, with a crimson hue of decline dominating for the three weeks leading up to the halving. This further hints at Bitcoin’s potential to diverge from its post-halving trends.
Even with the analysis, it’s crucial to keep in mind that the cryptocurrency market remains a tempestuous sea with unpredictability being the only constant. Bitcoin, a veteran sailor in these choppy waters, is known for taking unexpected courses. The Bitcoin Fear & Greed Index, while partially retreating from the realm of extreme greed, remains within the boundaries of greed, implying continued bullish optimism among investors. Consequently, if Bitcoin stays true to its reputation of doing the unexpected, it might stay on course and potentially follow the well-established trend, possibly leading to a price drop.
