Here’s How Bitcoin Halving Cycle Now Stacks Up Versus Past
As the current Bitcoin halving cycle continues to progress, see what previous cycles looked like at similar points in its lifespan.
Bitcoin’s last cycle recently passed the 150,000 block milestone
A “halving” is a periodic event where Bitcoin mining rewards (i.e. the block rewards miners receive for solving blocks) are cut in half. This occurs every 210,000 blocks or approximately every four years.
Since block rewards are basically the amount of new supply of BTC being created, being halved means the asset becomes more scarce. This is why halving is a feature of the BTC blockchain; By controlling scarcity like this, currency inflation can be checked.
So far, Bitcoin has observed three halvings: the first in November 2012, the second in July 2016 and the third in May 2020. The next event is estimated to take place in 2024. At the beginning, the reward for mining a block was 50 BTC, but today, after all these halvings, miners are only getting 6.25 BTC per block.
Since halvings are periodic, they are a popular way to map BTC cycles, using them as starting and ending points. An analyst in twitter did the same and compared the different cycles so far using the number of blocks since the start of the cycle as the common denominator between them.
Here is a chart that depicts that comparison:
The previous two halving cycles compared with the current one so far | Source: therationalroot on Twitter
As you can see from the chart above, Bitcoin’s different cycles so far have shown some similar features. Especially the former and current ones share some bizarre similarities.
The tops of both cycles appear to have formed after a similar number of blocks were created in the cycles. The 1 cycle halving saw this happen sooner, but not much, however. The bear market bottoms of all three cycles also had timed occurrences, with cycles 2 and 3 halving again sharing a tighter time.
While the timing is not as impressive as the bottoms, the last cycle of building a rally from the 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 throughout these cycles is the relationship between the price of Bitcoin and its realized price. Realized price is a metric derived from realized cap, which is the capitalization model for cryptocurrency that aims to provide a “fair value” for it.
In short, what realized price means is the average acquisition price or cost basis in the market. This means that when the price drops below this level, the average holder enters loss territory.
During bull markets, this level acted as support in all cycles, while this behavior changed in bear periods, where the level provided resistance to the asset.
On the chart, it is visible that Bitcoin has retested this level very recently and has successfully recovered from it, with the asset price gaining strong bullish momentum.
If the pattern maintained throughout the halving cycles is anything to go by, it could suggest that a bullish transition has occurred in the market and a rally similar to the April 2019 rally may have begun.
At the time of writing, Bitcoin is trading around $24,600, up 11% over the last week.
BTC has surged in recent days | Source: BTCUSD on TradingView
Featured Image from iStock.com, Chart from TradingView.com