If you are reading this article then congratulations, you survived 2022. The crypto space arguably just went through the worst year in its history. Unfortunately, we will not witness the return of the bull times, quite yet.
The one thing that could prove to be the biggest event of the year is actually happening in 2024, and that’s the next Bitcoin halving. A bitcoin halving is an event where the reward for mining new blocks is halved. It means that miners receive 50% fewer BTC rewards for mining transactions. The third halving occurred in May 2020 when the miner reward was reduced from 12.5 to 6.25 BTC. After the fourth halving, the reward will be cut to 3.125 BTC
Bitcoin halvings are scheduled to occur once every 210,000 blocks, approximately every four years. Furthermore, it will continue until the maximum supply of 21 million bitcoins has been mined by the network. The fourth halving is expected to occur sometime between Feb and May 2024. Interestingly, when we get there, 97% of all BTC that will ever be mined, will have been mined!
Why is the 2023 Halving Pump Important
Halvings are important events for traders. This is because they limit the supply of new coins, so prices can rise if demand remains strong. While the circumstances surrounding each halving differ, and market demands fluctuate, history demonstrates that the months before a halving are price positive as traders. It is also increasingly sophisticated for retail investors front-run the event.
A consensus seems to be forming that the end of the bear market will come in early 2023, before entering into a period of accumulation running into the next halving, after which the next bull market will begin. With all other factors being equal, in the third quarter (possibly earlier), BTC price action will be positive, simply because of the next halving over the horizon.
What Will the Price be at That Point?
Price predictions are educated guesses, but at the time of the actual halving, a fair price on logarithmical charts points to 40 – 50K BTC. Regression bands are a valuable T.A. tool whose historical perceptive gives us some useful insights. They show that the cycle bottom price is less than the price at the halving: that is the market bottom is reached before the halving.
With the price at the cycle bottom less than the price at the halving, that means the market will strengthen in-between, and the price at the halving will be higher than before. In other words, there is a pump from the cycle bottom to the fair value price at the halving. If you look back at the previous cycle, the bottom occurred well before the halving and the price saw a 150% gain before the actual halving – Though, it needs noting, that as each cycle plays out there are diminishing returns in the gains.
Will history repeat itself in 2023? It’s more accurate in crypto to say that history doesn’t repeat itself but it often rhymes. The halving in 2024 is inevitable, and people will try to front-run it. So, do expect a pump in BTC price this year. Between now and then there are likely to be relief market rallies as well, perhaps even getting to 40K. However, keep an eye on the macro outlook so you don’t get too excited. There will be no new All-Time Highs, but at least there will be some recovery and opportunity in 2023.
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