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In a recent video titled “bitcoin: Halving Pattern of the Year,” Well-known YouTuber Benjamin Cowen explores a recurring pattern in bitcoin's behavior in the first phase of its halving year. The halving event, which occurs approximately every four years, is a major event in the bitcoin ecosystem as it halves the reward for mining new blocks, thereby slowing the rate at which new bitcoins are generated.
What is halving and how does it work?
bitcoin was initially designed with a maximum circulating supply of 21 million coins. This design was intended to establish scarcity and maintain the long-term value of the coin. The halving, which reduces block rewards, is a strategic measure to restrict the introduction of new coins into circulation, preventing mining from causing inflationary pressures.
By gradually introducing new btc coins over several years through the halving process, the goal is to manage supply inflation, foster market stability, and ensure fair distribution of the cryptocurrency.
The pattern of the years before the halving
Cowen begins the video by recalling a prediction made in the third quarter of the year before the halving. It was speculated, based on historical patterns, that bitcoin would fall below its bull market support band during this period. This pattern, seen in years prior to the halving, actually repeated itself, as bitcoin fell below the support band, aligning with past trends.
February of the halving year: a key period
A crucial part of video It focuses on the behavior of bitcoin in February of the halving year. The author observes a consistent pattern where bitcoin has always been in its bull market support band this month. This pattern is not about bitcoin being above or below the support band, but precisely in it in February of each halving year.
Historical evidence and future predictions
The presenter provides historical evidence to support this observation. They cite the cases of February 2012, 2016 and 2020, which show that in each of these years, bitcoin reached the bull market support band during this month. Based on current levels, reaching the support band would imply a significant drop in bitcoin price, estimated at around 15%. However, the rate of decline could vary depending on the movement of the support band itself, which could increase over time.
Market movements and external factors
The video also addresses the behavior of bitcoin after its arrival at the support band. In 2012 and 2016, bitcoin maintained the support band level, but in 2020 it failed to maintain this level due to the pandemic and subsequent economic recession. These observations suggest that external economic factors, such as the state of the economy and the actions of the Federal Reserve, can significantly influence bitcoin's ability to maintain the support band level.
Implications for bitcoin price
Cowen concludes by emphasizing the importance of this pattern and its possible implications for future bitcoin price movements. It is anticipated that as February approaches, bitcoin could experience a decline to the bull market support band, although the exact trajectory could vary depending on several factors.
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