Bitcoin's bizarrely steady price pattern soon to face test
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If the bizarrely steady pattern for the price of bitcoin holds from the last two Bitcoin Halvings, then the oldest cryptocurrency's final all-time high for this cycle should hit within a month.
Why it matters: That's a gigantic "if," but this is something of a matter of faith among bitcoiners that the halving — the way the network reduces its inflation every four years — ultimately governs how its price ebbs and flows.
How it works: Bitcoin will only ever release 21 million coins into the market. About every 10 minutes, the network issues a few, a reward for miners validating transactions.
- Right now at each interval it issues 3.125 bitcoin (valued at $360,000).
- Every four years, however, the amount rewarded drops in half — "The Halving" — a process that will continue until the last fraction of the 21 millionth bitcoin finally gets released in 100 years or so.
The intrigue: If you went back before the last two halvings in 2016 and 2020 and found the lowest price for bitcoin, the all-time high would hit about 1,065 days later.
- It's a weird consistency, though it's only happened twice.
- If the pattern holds again, however, then the cycle's all-time high is coming in the next few weeks. (Oct. 5 would be 1,065 days from the prior nadir.)
What we're watching: Two different events could show us that bitcoin is working differently in this cycle than it has in the past.
1. Bitcoin has been on a general upward trend since before the 2024 halving, thanks to the approval and launch of bitcoin spot ETFs earlier that year. What we're watching now is whether that general upward trend could continue on beyond the fall.
- That would mean the halving control over bitcoin's cycle has broken.
2. If a final all-time high really does hit in late September or early October, whether the subsequent price decline stops at 40% to 60%.
- Typically, at the end of a cycle, bitcoin will decline 80% or more. A less severe drop would mean that the market has far more long-term holders buying bitcoin, diminishing the power of short-term speculators.
Flashback: At this time in 2021, before the last cycle peak, people were still frenetic about NFTs, and bitcoin price quintupled in value from the prior Fall.
- In 2017, initial coin offerings were all the rage, and bitcoin had gone up 20X in a year.
This time, bitcoin hasn't quite managed to 3X its value from all the way back at the start of 2024. It's been a longer, slower grind upward. No one has gotten a head rush this time.
The bottom line: By Thanksgiving we will have a good idea of whether the halving retains its spooky control over the market for bitcoin or if, in fact (as we have suspected), the market has really changed for good.
