Here’s how the Bitcoin Halving Cycle now stacks up versus the past
Economic ascending graph and chart with lines and numbers illustrating stock market behavior. Concept of successful trading. Dark blue background. 3d rendering
As the current Bitcoin halving cycle continues to unfold, here’s what the previous cycles looked like at similar points in its lifetime.
The last Bitcoin cycle recently passed the milestone of 150,000 blocks
A “halving” is a periodic event in which Bitcoin’s mining rewards (that is, the block rewards that miners receive for solving blocks) are halved. This takes place every 210,000 blocks or about every four years.
Since the block rewards are basically the amount of new BTC supply that is created, halving means that the asset becomes more scarce. This is why the halving is a feature of the BTC blockchain; by controlling scarcity like this, inflation of the coin can be controlled.
So far, Bitcoin has observed three halving events: first in November 2012, second in July 2016 and third in May 2020. The next such event is estimated to take place sometime in 2024. In the beginning, the reward for mining a block was 50 BTC, but today, after all these halvings, miners only receive 6.25 BTC per block.
Since halvings are periodic, they are a popular way to chart BTC cycles using them as start and end points. An analyst at Twitter have done the same and have compared the different cycles so far against each other using the number of blocks since the cycle started as the common denominator between them.
Here is a chart showing this comparison:
The previous two halving cycles compared with the current one so far | Source: therationalroot on Twitter
As you can see in the graph above, the various Bitcoin cycles so far have shown some similar features. In particular, the previous and current ones share some bizarre similarities.
The peaks of both these cycles appear to have formed after a similar number of blocks had been created in the cycles. The Halving 1 cycle saw this happen earlier, but still not too much. The bear market bottoms for all three cycles also had closely timed events, with the halving cycles of 2 and 3 again sharing tighter timing.
Although the timing is not as striking as the bottom, the latest cycle building a rally out of bear lows also looks like what happened in the second cycle, where the April 2019 rally took place.
Something that also seems to have held up through these cycles is the relationship between the price of Bitcoin and its realized price. The realized price is a calculation derived from the realized cap, which is the capitalization model for the cryptocurrency that aims to provide a “real value” for it.
In short, what the realized price means is the average acquisition price or cost basis in the market. This means that when the price falls below this level, the average holder enters the loss territory.
During bull markets, this level has acted as support throughout the cycles, while this behavior has reversed during bearish periods, where the level has provided resistance to the asset instead.
From the chart, it is visible that Bitcoin retested this level quite recently and successfully bounced off it, with the price of the asset gaining a strong upward momentum.
If the pattern held through the halving cycles is anything to go by, this may indicate that a bullish transition has now taken place in the market and a rally similar to the April 2019 rally may have begun.
BTC price
At the time of writing, Bitcoin is trading around $24,600, up 11% in the past week.
BTC has surged in recent days | Source: BTCUSD on TradingView
Featured image from iStock.com, chart from TradingView.com
