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bitcoin halving
Nexo Logo

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

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 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.

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

Related Reading | Analyst: Crypto Market Pullback Imminent But May Not Occur For Months 

This doubles the cost of production per BTC overnight.

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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

— COVID COFFEE CRYPTO☕ (@overheardcoffee) 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.

bitcoin halving crypto winter

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.

Related Reading | Ancient Math May Be the Key to Making Crypto Bull Market Riches 

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.

Tags: Bear marketbitcoinBitcoin Halvingcryptocrypto winterdowntrend
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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