With the halving of Bitcoin next month on May 11, 2020, the expectation in the crypto world has long been high that the valuation of the very first cryptocurrency would skyrocket, but the catastrophic sell-off last month has some doubts about the theory .
However, historical data suggests that Bitcoin price is currently at a pace that the crypto asset was before halving and inflating the hype bubble before.
Calculation of the crypto cycle: Bitcoin at pace with the price action halved in advance
The crypto asset class has seen a brutal downtrend and bear market for over two years, eliminating 90% or more of the value of most cryptocurrencies.
From high to low, bitcoin price fell 84% from its all-time high of $ 20,000 to its current low of $ 3,200.
Related Reading Bitcoin explodes 80% before halving according to past cycle comparisons
The catalyst for the massive bull run, when you look at the Bitcoin price charts, seems to be halving the asset.
Any halving of the block reward miners received for validating the blockchain network is reduced by 50%. The theory is that the reduced supply that comes onto the market ultimately reduces the sales pressure on miners and creates an imbalance between supply and demand that leads to an increase in valuations.
After the last two halves, shown as red dotted vertical lines in the price table above, the Bitcoin price exploded in value and didn’t stop until the next big peak and the cycle started again.
But with the recent sell-off given the impending recession and the dramatic impact of the pandemic on the economy, all cash, including Bitcoin, gold, stock market and more, fell.
Even the strongest supporters of the emerging tech and asset class have considered the possibility that the experiment is over, and fears that these assets may soon be zeroed in on the crazy line to cash out before the coming storm .
However, the recent collapse has actually put Bitcoin back on more realistic valuations and brought it perfectly back to the previous cut in half, signaling that the fabled crypto bull run after the cut in half won’t get out of range.
When measuring the distance from the end of each cycle to the current levels compared to where the Bitcoin price is now compared to the last cycle of the bear transition to the bull market.
This is a gain of more than 120% from the low of $ 3,200.
In the same period of the last cycle – just a month before halving – the Bitcoin price was also trading 120% above the low that had been set 18 months earlier.
What happened after Bitcoin and crypto were put on the card as a financial asset? Bitcoin prices rose from under $ 500 to over $ 5,000 before the public prevailed. FOMO later raised the asset to $ 20,000.
Now the Bitcoin price is back at the peak of financial opportunities. If things go exactly that way, the next high would currently price over $ 300,000.
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As exciting as it sounds, it would be unrealistic that Bitcoin price would do as well as it did in previous cycles, as each new cycle has led to falling returns. Regardless, getting started is early enough to take advantage of the next crypto bubble that hasn’t even started yet.
Photo by Hans Eiskonen on Unsplash