The Five Phases of Bitcoin Halving Explained
Bitcoin halving is an event where miner rewards are split in half, and they receive half the number of bitcoins for verifying transactions. Halving takes place after every 210,000 blocks or every four years until bitcoins’ total supply of 21 million is reached. Halvings are important for investors because they reduce the rate at which new bitcoins are created. This potentially raises bitcoin prices if demand remains stable.
The next halving is expected in April 2024, around when the network hits 740,000 blocks. At that time, the block reward will decrease from 6.25 to 3.125 bitcoins. The exact date is uncertain due to the variable time it takes to generate new blocks on the network. Let’s delve into the five phases highlighted by Rekt Capital, providing insights for traders and enthusiasts alike.
Phase 1: Accumulation Phase
In this phase, investors start accumulating bitcoins in anticipation of a price increase after halving. This leads to a gradual rise in bitcoin’s value as demand increases.
Phase 2: Pre-Halving Pump
As halving approaches, there is often a significant price pump due to increased media coverage and FOMO (Fear of Missing Out) among investors. This can result in a rapid surge in bitcoin’s price.
Phase 3: Post-Halving Dump
After halving occurs, some investors may sell their holdings, leading to a temporary decrease in bitcoin’s price. This phase is characterized by a short-term correction or bearish trend.
Phase 4: Consolidation Phase
In this phase, bitcoin’s price stabilizes as traders and investors assess the impact of halving on the market. The price tends to trade within a range, indicating a period of consolidation.
Phase 5: Bull Run Phase
Once the market has absorbed the effects of halving, bitcoin’s price often enters a bull run phase. This is characterized by a significant and sustained increase in price as demand surpasses supply.
Understanding these five phases can help you make informed decisions as a trader or enthusiast during the bitcoin halving event. Remember that past performance is not indicative of future results, and market conditions can vary.
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