Bitcoin Halving Approaching: What it Means for the Market
The cryptocurrency market is entering an intriguing phase as Bitcoin halving draws near. With the event expected to occur in mid-2024, investors are increasingly fascinated by its potential impact. However, historical patterns suggest that a mature bull market may not begin until next year at the earliest.
Supply Held by Long-Term Holders Approaches ATH
One key indicator of the cryptocurrency market’s health is the supply of Bitcoin held by long-term holders (LTHs). This metric has historically had a negative correlation with Bitcoin’s long-term price action.
During market bottoms, LTHs tend to hold onto their assets, refusing to sell even as prices plummet. Conversely, during a bull market, LTHs become more willing to sell as prices surge. Historically, major bull markets have been accompanied by a significant drop in supply held by LTHs, with short-term holders (STHs) entering the market for quick profits.
Cryptocurrency analyst @therationalroot published a chart showing Bitcoin supply held by LTHs and highlighted the proximity of the current supply ratio to its all-time high (ATH). This ratio reached its peak several months before each previous halving event and gradually declined until entering a mature bull market about six months after halving.
Bitcoin Halving is 85% Complete
@therationalroot also shared a chart indicating that the current Bitcoin halving is already 85% complete. Previous cycles have shown similar sideways price action during the final 15% of the cycle. However, two cycles ago, Bitcoin experienced an upward-biased sideways trend, while in the previous cycle, the COVID-19 crash provided an additional opportunity for investors.
If history repeats itself, the cryptocurrency market could face a roughly one-year sideways trend following the halving in mid-April 2024. The effects of the halving may only become apparent in late 2024 and throughout 2025. This prediction aligns with the approaching ATH of supply held by LTHs, which will need about 12 months to reverse its trend before entering a distribution phase.
Hot Take: Bitcoin Halving Could Signal Bull Run
As Bitcoin halving approaches, it is important to consider historical patterns and indicators. While the event itself may not immediately impact BTC’s price, it could mark the beginning of a cryptocurrency bull run. Pay attention to the supply held by long-term holders and their willingness to sell after halving as an early signal of market trends.
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