Bitcoin’s current behavior mirrors its path in a previous halving cycle. What can we expect from the next halving?

Following the U.S. SEC’s approval of spot ETFs on Jan. 11, Bitcoin (BTC)began a bullish streak, soaring to impressive heights. Bitcoin hit a new all-time high of $73,750 on Mar. 14. However, this peak was short-lived as Bitcoin experienced a correction, dropping to levels around $60,000 to $61,000 on Mar. 20. Amid bullish sentiments, Bitcoin recovered from this dip. As of Mar. 22, it trades at around $63,000. According to a report by Coinbase, Bitcoin’s current path mirrors its behavior in 2018-2022, where Bitcoin witnessed a remarkable 500% increase from its lowest point in the cycle. For those unfamiliar, the Bitcoin network halves the rate at which it generates new Bitcoins approximately every four years in an event known as the Bitcoin halving. This built-in feature of Bitcoin’s code aims to control its inflation rate. Historically, Bitcoin has followed a pattern surrounding its halving events. It usually experiences a price increase leading up to the halving, followed by a period of correction or consolidation, before ascending to new highs post-halving. Let’s delve deeper into Bitcoin’s past cycles, examine its behavior, and predict its potential direction in the current cycle. THE FIRST HALVING: 2012 The first halving event in 2012 reduced the block reward from 50 to 25 BTC, slowing down the rate at which new Bitcoins entered circulation. During this time, Bitcoin was largely flying under the radar, and it was known within niche tech communities. It wasn’t until the price skyrocketed from double digits to over $1,000 in 2013 that it began to capture mainstream attention. Despite this surge, the broader financial world dismissed Bitcoin as a passing fad, failing to recognize its potential. Following this meteoric rise, Bitcoin experienced a quick correction, with prices falling back to around $200 by 2015. Critics were quick to declare the end of Bitcoin, citing the burst of what they deemed a speculative bubble. However, as subsequent cycles have shown, such claims were premature. THE SECOND HALVING: 2016 In July 2016, Bitcoin underwent its second halving, reducing the block reward from 25 to 12.5 BTC. This event garnered widespread attention as Bitcoin had already started to gain traction in the mainstream financial world. Before the 2016 halving, Bitcoin exhibited a somewhat bullish pattern. In January that year, prices hovered around $430, climbing to over $750 by early June, ahead of the halving. However, as the halving event approached, the price experienced some volatility, dipping to around $590 by the end of Jun. Following the completion of the halving, Bitcoin entered a period of consolidation, trading sideways for several months. However, this phase was short-lived as the effects of the halving began to materialize. By Dec. 2017, approximately 1.5 years after the halving, Bitcoin had surged to new heights, reaching above $19,000, making over 12,000% gains in that cycle.