July 22, 2024

Bitcoin growth model: $ 170,000 after halving

The most anticipated event in the cryptocurrency industry in 2020 is the Bitcoin halving. Many people believe thatIt is after halving that a new growth cycle begins and there is a logical explanation for this.

In the traditional economic systemThe Central Bank is in charge of regulating the national currency (monetary policy), which, if necessary, can saturate the economy with money or withdraw it from circulation. There are various tools for this: currency intervention, a quantitative easing program, raising or lowering interest rates on loans and deposits for commercial banks, devaluation, and other methods. They allow the Central Bank to curb or increase inflation and generally affect the economic situation in the country.

In the case of bitcoin, which does not havecentral bank, inflation is regulated according to the general consensus of the network by a cryptographic algorithm that determines the time and number of coins issued. Every 10 minutes, miners get a new block, which records network transactions and which contains information about previous blocks. To generate a new block, miners need to solve a mathematical problem, but this requires more computing power. For generating a new block, the miner receives a reward from the network, embedded in the algorithm, which in its essence is the emission of bitcoin. Every 210,000 blocks, the production of which takes 4 years, the amount of remuneration or issue is reduced by 2 times. This halving is called halving.

Before halving in 2012, miners received 50 BTCfor the mined block, after which the reward decreased to 25 BTC. After halving in 2016, the amount of remuneration decreased to 12.5 BTC. In May 2020, after the third Halving account, the issue for the mined block will be 6.25 BTC. In 2138, 2 years before the last bitcoin mined, the last halving in history will take place, after which the reward for miners will be 0.000000005820766091 BTC. It will not be such a big reward as it is today, even if Bitcoin costs $ 1 billion, but the last coins mined can cost a fortune. The main source of income for miners, by then, will be transaction fees.

Thus, the goal of halving is to increasethe complexity of Bitcoin mining and the distribution of its emission over 130 years. Halving curbs hyperinflation and makes Bitcoin more scarce, which has a positive effect on its value in the future. Accordingly, the cryptocurrency community is not unreasonably waiting for a new halving, which should be followed by a new Bitcoin bullrun.

For most members of the crypto community, all of the above is not a great secret, but there are 3 main questions that interest them:

  1. How will Bitcoin behave before halving?
  2. Will there be growth immediately after halving?
  3. What will happen to the price of bitcoin in the next 1.5-2 years?

Regulated Cryptocurrency Analystexchanges Currency.com Mikhail Karkhalev studied the behavior of Bitcoin before and after halving for all 10 years of the coin’s existence and discovered certain patterns. Based on them, the analyst formed a Bitcoin growth model and shared his assumptions with the community.

Business cycles</p>

One of the postulates of Charles Doe, creatortechnical analysis states that history always repeats itself. This applies not only to stock markets, but also to any economic model or system. Growth always follows a fall, a bottom falls, a recovery follows a bottom, and a peak recovers. There are 4 most famous cyclic models:

  • Kitchin cycles - 2-4 years;

  • Cycles of Juglar - 7-11 years old;

  • Kuznets cycles - 11-25 years;

  • Kondratiev's cycles are 45-60 years old.

  • These loops look like this:

    Bitcoin growth model: $ 170,000 after halving

    And here comes the first interesting observation. Kitchin's cycles are short-term economic cycles with a characteristic period of 2-4 years, which the economist himself associated with short-term cycles of fluctuations in world gold reserves. By creating Bitcoin, Satoshi Nakomoto developed a self-sustaining system that would look like gold mining and reduce coin emissions every 4 years. Accordingly, the entire Peak-Recession-Bottom-Recovery economic cycle should take 4 years from halving to halving, which is very similar to Kitchin’s cycles.

    Next, you should pay attention to how Bitcoin behaved before and after each new halving. The script was always the same:Peak - Descending Triangle (Recession) - Bottom - Recovery to the average value - Halving.

    First the price reaches peak values ​​afterpowerful bullish rally. Having reached the top, Bitcoin begins to fall according to the Descending Triangle technical analysis model. Before breaking through the support level, the price bounces off it several times, after which it breaks out and moves to the “bottom.” Next, there is a gradual process of price recovery to near average levels from the previous peak. The remaining period of time before halving the price moves in different directions, but by halving it returns to the average from the previous peak. After halving, Bitcoin gradually begins to grow and soon reaches a new peak.

    2011-2013 year
    Bitcoin growth model: $ 170,000 after halving

    The first peak at $ 32 bitcoin reached in June 2011,immediately after this came a collapse. The fall occurred within the framework of the technical analysis model "Descending Triangle". Price highs were constantly decreasing, and the support line was the level of $ 8. After the breakdown of the support level, the price rushed to the bottom, which became the mark of $ 2. Then, the recovery process to the average value from the previous peak followed - this is $ 15. Before halving, the price moved in different directions, but on the day of halving, November 28, 2012, it was $ 12.25, which is close to the average value from the previous peak. 13 months after halving, bitcoin reached a new peak.

    2013-2016

    Bitcoin growth model: $ 170,000 after halving

    A similar model was observed between December2013 to July 9, 2016: "Peak - Descending Triangle - Bottom - Recovery to the average value from the previous peak - Halving." The peak fell at the level of $ 1,177, the bottom - $ 163, the average value - $ 784, and the price approached the halving at $ 665. 17 months after halving, the price reached a new peak.

    2017-2020

    Bitcoin growth model: $ 170,000 after halving

    In December 2017, the peak hit $ 19794, followed by a recession, bottom at $ 3,148 and recovery. Today we already know the recovery price or the average value from the previous peak - $ 13,830. If you follow the logic of the resulting model, the price will return to about $ 12,000 by halving. Why?

    Bitcoin price before halving 2020</p>

    Percentage difference between recovery price andThe price per day of halving is usually 9-10%. In 2012, the recovery price was $ 15, or 46.87% from the previous peak at $ 32, the price on the halving day was $ 12, or 37.5% from the previous peak at $ 32. The difference between the two values ​​is 9.37%.

    In 2016, the recovery price was $ 784 or 66.6% from the previous peak at $ 1177, the price on the day of halving was $ 665 or 56.49%. The difference between the two values ​​is 10.11%.

    Following this logic, $ 13,830 is 69.86% of the peak in$ 19,794, respectively, to halving, the price will be approximately 59.8% - 60.8% of the peak or $ 11,836 - $ 12,034, which corresponds to the key resistance level of $ 12,000, which opens the way for bitcoin to new growth.

    Bitcoin Growth Model</p>

    By visualizing all the observations in a whole picture, the following Bitcoin growth model is emerging, with which you can predict a new peak that will be conquered after the 2020 halving.

     Bitcoin growth model: $ 170,000 after halving

    The first serious growth of bitcoin occurred in 2010the year the price reached 50 cents per coin. The second peak was at $ 32, which is 64 times more than the previous peak of 50 cents. The third peak was at $ 1,177, which is 36.8 times more than the previous peak at $ 32. The fourth peak is $ 19,794 more by 16.8 times than the peak of $ 1,177. Note that the growth force actually halves each time:

  • The ratio of the growth force between peak 1-2 and peak 2-3 is 1.74 (64 / 36.8 = 1.74);

  • The ratio of the growth force between peak 2-3 and peak 3-4 is 2.19 (36.8 / 16.8 = 2.19).

  • To find out the future growth force and the new peak, it is necessary to find out the average value of the relationship between the previous growth forces:

    (1.74 + 2.19) / 2 = 1.965.

    Accordingly, if the last growth force of 16.8 decreases by 1.965 times, then the next growth force will be x8.55.

    19,794 * 8.55 = $169,238 – Bitcoin’s next peak.

    According to statistics, growth begins after halvingalmost immediately, but moves gradually, updating the historical maximum in 5-7 months. After a slight correction that lasts a few weeks, the rise continues, developing into a new bullrun within a year, after which a new peak is reached. Accordingly, an update to the price maximum can be expected approximately six months after the halving or by the end of 2020, and a new peak after 18 months or by the end of 2021.

    Summary</p>

    Based on this observation and calculations, we can draw the following conclusions:

    1. According to statistics, on the day of halving the price is at about average values ​​from the previous peak or at the level of $ 11 836 - $ 12 034 on the day of halving in May 2020.
    2. Growth after halving begins almost immediately, but it is progressing gradually, updating the historical maximum only after 5-7 months.
    3. Presumably, if the observations and calculations are correct, then in 18-20 months the price of Bitcoin could reach $169,238.

    Please note that this modelis a personal observation and opinion of Currency.com analyst Mikhail Karkhalev and is in no way the ultimate truth, much less a guide to action. Remember that cryptocurrencies are high-risk assets whose future prices are unpredictable.