Bitcoin Halving Overhyped: Previous Cycle Led to Another 6-Month Crypto Winter

Tony "The Bull" Severino

5 years ago

2 mins read

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The Bitcoin halving is right around the corner, less than three total months away. The event is said to cause extreme bullishness and could send Bitcoin to prices of $55,000 or higher shortly after the event takes place.

But while crypto analysts are expecting a massive rally following the Bitcoin halving, the last halving was the start of yet another crypto winter, before the bull market truly began.

Shock and Awe: Bitcoin Halving Expectations May Not Match Reality

The upcoming Bitcoin halving in May 2020 might take crypto investors by surprise.

The digitally-coded event will slash the block reward miners receive for validating each new block added to Bitcoin’s blockchain by half.

This doubles the cost of production per BTC overnight.

Because of the cost of production so largely outweighs the price of Bitcoin, miners stop selling until prices catch up.

The lack of supply creates an imbalance of demand that causes valuations to surge exponentially in the already scarce asset.

Because of this design, Bitcoin is expected to skyrocket in value after the halving.

Stock-to-flow models put the value per BTC at $55,000 or higher immediately following the halving, due to the impact the event has on the limited supply of the cryptocurrency.

And investors are correct, at the core. Each halving has kickstarted massive, year-long rallies that led to new all-time highs after the crypto asset goes parabolic from FOMO.

$BTC #bitcoin
I'm not sure where this idea that halvening = ULTRA MOON NOW came from…but looking at 2016 👀

– Entirely sure our time will come but
– What if we are here, but at 1/7th the speed?
– Are you prepared for a downtrend into next Winter? pic.twitter.com/RuYzWmYpWy

— COFFEE CAPITAL (@Crypto_Coffee) February 19, 2020

However, it isn’t a situation where the halving happens, and suddenly Bitcoin takes off like a rocket ship.

Instead, what has happened in the past, was that a pre-halving rally led Bitcoin to new local highs, but failed to set a new all-time high ahead of the event.

Could Another Six-Month Downtrend Plague the Crypto Market Post-Halving?

Once the Bitcoin halving took place, days later, a massive, steep, 40% selloff happened that took a full six-months to play out.

After Bitcoin topped out in June 2019, it fell into another extended six-month downtrend, from $14,000 to $6,400.

If a similar selloff happens once again post Bitcoin halving, the price should fall from roughly $18,000 back to $10,500 support, before the true bull market begins.

After this last six-month-long downtrend, the first-ever cryptocurrency experienced limited pullbacks while a parabolic advance reached higher and higher until a new record was set.

Crypto investors looking for an example of this need to look no further than Litecoin. Just ahead of its halving the altcoin experienced a deep selloff that wiped out much of the asset’s pre-halving gains.

However, those that can withstand the coming post-Bitcoin halving selloff, will end up riding the rally all the way to a new all-time high.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.