The Bitcoin halving event, a crucial event in the cryptocurrency world, has historically driven a four-year cycle in the Bitcoin market. However, with Bitcoin’s recent decline and market skepticism, some industry experts question whether this cycle is still effective. This article delves into the matter, analyzing the reasons behind the skepticism and presenting arguments that suggest the cycle might still hold true.
The Four-Year Halving Cycle: A Brief Recap
Looking back at the previous three cycles, Bitcoin has consistently reached its peak around four years after each halving event. The first cycle’s peak was in December 2013, followed by peaks in December 2017 and November 2021 for the second and third cycles, respectively. This pattern of a four-year cycle has been consistent throughout these cycles.
Moreover, the halving event has typically occurred around 500 days before Bitcoin reaches its lowest or highest point, a trend that has held true for the past five halving events. For instance, the recent halving event took place 517 days before the current cycle’s lowest point.
Reasons for Skepticism
However, recent developments have raised concerns among some industry experts. With Bitcoin’s price falling to $52,000, market sentiment has become low, leading to skepticism about the effectiveness of the four-year cycle. The following reasons have been cited:
- Historical Anomaly 1: This cycle saw Bitcoin break its historical price record before the halving event, which has never occurred before. Historically, Bitcoin has always broken its record price after the halving event.
- Historical Anomaly 2: In the four months following each halving event, Bitcoin has performed the worst in this cycle, which has not been observed in previous cycles.
- Internal Factors: The impact of the halving event on Bitcoin has diminished over time, with external macro events playing an increasingly significant role in determining Bitcoin’s price.
- External Factors: External macro events, such as regulatory news or geopolitical tensions, have begun to dominate Bitcoin’s price movements.
Arguments Against Skepticism
Despite these concerns, some arguments suggest that the four-year cycle might still hold true:
- Non-determining Anomalies: The historical anomalies 1 and 2 are not conclusive. The reason for Bitcoin breaking its record price before the halving event is likely due to events like the approval of Bitcoin ETFs and market expectations about the halving event.
- Major Anomalies: The previous cycle saw Bitcoin reach its peak despite major events like the 519 Crash and the NFT boom. This suggests that the four-year cycle might still be effective.
- The Bear Market Lasts Only One Year Rule: This rule has not been broken in this cycle, with the lowest point of this cycle occurring one year after the highest point of the previous cycle.
- Halving Time and Price Peaks: The time between the halving event and Bitcoin’s lowest or highest point has consistently been around 500 days, a trend that has held true for the past five halving events.
Conclusion
In conclusion, while there are reasons to be skeptical about the effectiveness of the four-year cycle, the evidence suggests that it might still hold true. The Bitcoin halving event continues to play a significant role in driving the cryptocurrency market’s cycle, and external factors often play a secondary role to internal factors like the halving event. With Bitcoin’s price set to reach new highs in the coming years, it remains to be seen whether the four-year cycle will continue to hold true.
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