Key Points
- The Bitcoin (BTC) halving is expected to cause a short-term drop in price, according to Bitwise Asset Management.
- Historically, the year following a Bitcoin halving has seen significant price increases.
The much-anticipated Bitcoin halving is imminent, with a predicted date of April 20. Bitwise Asset Management has suggested that the month following this event could see a disappointing drop in Bitcoin’s price, based on historical patterns.
Past Halving Patterns
Bitwise’s analysis of previous Bitcoin halvings reveals a trend of price decreases in the month following the event. However, this short-term slump is usually followed by a significant surge in price over the next year.
For instance, the 2012 halving saw Bitcoin’s price increase by 9% in the following month, but it then skyrocketed by 8,839% over the next year. The 2016 halving followed a similar pattern, with a 10% drop in the month after the halving, followed by a 285% increase to a peak of $20,000 in 2017. In 2020, the price rose by 6% in the month after the halving, then experienced a 548% increase over the following year.
Short-Term Impact vs Long-Term Gains
Bitwise suggests that while the market typically anticipates the short-term effect of the halving, it tends to underestimate the long-term impact. This current market cycle is unique in that Bitcoin has reached an all-time high before its halving, peaking at $73,679 on March 13 before dropping 16% to around $64,400.
Industry leaders seem to share the pessimistic short-term view. Markus Thielen, 10x Research head of research, predicted a potential $5 billion miner sell-off after the halving, which could push prices down. Marathon CEO Fred Thiel suggested that the expected halving rally has already been factored into current prices, preempting the usual post-halving surge.
Traders and analysts are also predicting potential market corrections. “Rekt Capital” listed five significant pullbacks since the 2022 bear market low, ranging from 18% to 23%, suggesting that the market could have further to fall. Another analyst, “Cold Blooded Shiller,” noted that 30% corrections are not uncommon, hinting that Bitcoin could potentially drop to around $51,000.
Despite these short-term predictions, the historical trend suggests that Bitcoin could see significant gains in the year following the halving.