Insights into Bitcoin’s future: Unveiling the lessons from its previous halving cycles

Bitcoin’s recent price behavior is reminiscent of its previous halving cycle. After the approval of spot ETFs by the U.S. SEC, Bitcoin experienced a surge and reached a new all-time high of $73,750 on March 14. However, this peak was short-lived, and Bitcoin corrected to levels around $60,000 to $61,000 on March 20. Despite this dip, Bitcoin has since recovered and is currently trading around $63,000 as of March 22.

According to a report by Coinbase, Bitcoin’s current trajectory is similar to its behavior during the 2018-2022 period, where it saw a remarkable 500% increase from its lowest point in the cycle.

Bitcoin’s halving events, which occur approximately every four years, have historically followed a pattern. The price of Bitcoin usually increases leading up to the halving, experiences a period of correction or consolidation, and then reaches new highs after the halving.

Let’s delve deeper into Bitcoin’s past cycles, analyze its behavior, and predict its potential direction in the current cycle.

The first halving occurred in 2012 and reduced the block reward from 50 to 25 BTC, slowing down the rate at which new Bitcoins entered circulation. Bitcoin was relatively unknown at this time and only gained mainstream attention when its price skyrocketed to over $1,000 in 2013. However, Bitcoin experienced a quick correction, and prices fell back to around $200 by 2015. Despite critics declaring the end of Bitcoin, subsequent cycles proved them wrong.

The second halving took place in 2016, reducing the block reward from 25 to 12.5 BTC. Bitcoin had already gained traction in the mainstream financial world by this time. Before the halving, Bitcoin exhibited a bullish pattern, with prices climbing from around $430 to over $750 by early June. However, as the halving approached, the price experienced some volatility, dipping to around $590 by the end of June. After the halving, Bitcoin entered a consolidation phase but eventually surged to new heights, reaching above $19,000 in December 2017.

The third halving occurred in 2020, and leading up to it, Bitcoin went through a consolidation phase. Prices traded in a narrow range of $7,000 to $7,500 in early January. After the halving, Bitcoin gained momentum, and by November 2020, it had surged to around $15,000. This upward trajectory continued, and Bitcoin reached a new all-time high of nearly $69,000 in November 2021. Despite the backdrop of the COVID-19 pandemic, Bitcoin’s price pattern adhered to the established cycle.

During the third halving cycle, institutional investors like Paul Tudor Jones and Michael Saylor publicly announced their allocations to Bitcoin, signaling growing acceptance among traditional investors. The cycle followed the familiar pattern of a price surge leading up to the halving, followed by a brief correction and consolidation phase before a significant bull run.

As for the next halving, many believe that we are on the cusp of a bull market. The introduction of spot BTC ETFs is seen as a game-changer that indicates Bitcoin’s move from the fringes to the mainstream financial world. Analysts like Michaël van de Poppe suggest that we are entering an “institutional cycle” with huge capital inflows into the market. Van de Poppe questions the theory of “diminishing returns” and highlights technological advancements and institutional investments as drivers for potentially unprecedented market highs.

Van de Poppe speculates that we might be on the verge of a “Crypto Dot.com” bubble, drawing parallels to the dot-com bubble of the late 1990s. However, he anticipates that this crypto cycle could last longer, influenced by economic elements like liquidity and interest rates. He cautiously predicts a peak in Q3/Q4 2025, with the potential for the bull cycle to extend into 2026 or 2027.

In conclusion, the next Bitcoin halving is expected to happen around late April or May. Each halving brings its own market patterns, so investors should be prepared for ups and downs. It is advisable to focus on purchasing power rather than USD valuations and to be cautious with trades.