Disclosure: I own bitcoin.
I’ve been writing for years—since the last four-year bitcoin cycle—that the next big move would be driven by the “halvening” when bitcoin supply will be cut in half. This idea has made me a lot of money from the last two cycles and by now anyone who is not a complete crypto novice will know about it and understand how halving the supply of new bitcoin is bound to drive the price higher.
Back in 2017, the bitcoin market was still in its infancy and even ether was a novelty. It took a long time past the halvening, which occurred in July 2016, for the effect to kick in. Come 2020, the effect came soon after the May halvening, and today the market is pre-empting it. This pre-emption is how long-established markets work. Traders don’t wait around for the event, they buy in early and this drives the price before it happens.
You can see this in the chart of the halvenings:
The bitcoin chart: the halvenings
Credit: ADVFN
Of course, you might disagree about the potency of the halvening, but so far it has paid me as affirmation.
So let’s look at 2017 and the current status. To gauge the pattern and project the outcome this year on the price of bitcoin:
I’ve just plonked 2017 at a continuation point on the current chart and have not attempted scaling. I feel $80,000 is a good top target but it could well be far higher with $120,000 quite feasible and with the bitcoinBTC Maxis types stating they might see $250,000 as the target. I feel the 10x days are gone and a simple double on previous highs is more achievable.
So let’s look at 2020 and 2024:
Again this suggests we are in the early stages. 2020 is more bullish than 2017 and we see the halvening take off before the event as a newer more seasoned market pre-empts rather than waits.
So a bull will consider the next repricing event is underway and that the pattern will be similar. However, now the market is regulated with many previously spicy players out of the game and those remaining overseen and burned in, the previous patterns should be different because the game has changed and with it so will the performance. Crypto is also at the mercy of geopolitics for good or ill as it is far less cut off from mainstream finance as in the past. Again, this can be both bullish or bearish. However, the pure play bubble bust cycle of old is no longer the preserve of early adopters and now has the sort of broad range of participation that can slow down once explosive markets. We have all heard the concept of “market stability” and it is being put in place by the regulators, so it’s worth keeping that in mind as bitcoin heads further into the halvening part of the cycle.
My targets: $80,000 BTC, $8,000 etherETH . And from my record of past caution there is certainly potential for more.
In any event, it’s game on.