Analysis: From the perspective of the halving time period, why will the bull market start as early as next year?

作者：Jakub Dziadkowiec, BeinCrypto

Compiled by: Felix, PANews

According to the latest data, 85% of the time has passed since the halving in May 2020 to the next round of halving. Meanwhile, supply held by long-term holders (LTH) is near all-time highs (ATH). In previous cycles this was a signal near a macro bottom, followed by the early stages of a new cycle.

LTH holdings near peak levels

Historically, the amount of Bitcoin held by long-term holders has been an indicator of the health of the crypto market. Historically, this metric has been negatively correlated with Bitcoin’s long-term price action.

Long-term position holders hold assets in place (HODL) when the market bottoms. Moreover, increases in long-term holders' positions occur during bear markets (red arrow). This is when large investors see the price of Bitcoin plummet and are reluctant to sell. They hold onto their tokens in the belief that the crypto market will rebound in the future and their investment will be profitable.

In contrast, during a bull market crash, the opposite is true. The surge in Bitcoin prices has led to an increasing willingness among long-term holders to sell their assets to take advantage of the situation. Historically, in every bull market, long-term holders’ Bitcoin holdings have declined during the period. Of course, these tokens are then transferred to short-term holders (STH), who join the market at a later stage out of a desire to make quick profits.

Cryptocurrency analyst @theationalroot posted a chart on the X platform of the number of Bitcoins in the hands of long-term holders. He also overlaid each Bitcoin halving onto his plot (above). In his chart, the first thing to notice is the fact that the proportion of Bitcoin in circulation in the hands of long-term holders is currently close to 76% of its ATH. The ATH record was set in late 2015 when Bitcoin price ended its accumulation phase ahead of the second halving.

It can then be seen that each time this indicator reaches its peak for a given cycle a few months before the Bitcoin halving occurs (green circle). Then, after this local peak, Bitcoin in the hands of long-term holders gradually declines and trades sideways until a few months after the next halving. The sharp drop in this indicator comes about six months after the halving, before the cryptocurrency entered a full bull run.

85% of the time has passed since the last round of halving

The aforementioned analyst also posted another chart showing Bitcoin’s halving percentage progress (below). This graph compares the time period between historical halvings for the previous 3 cycles.

According to @theationalroot, the Bitcoin halving is currently 85% complete. For the remaining 15% of the time, Bitcoin’s price basically moved sideways. Because compared to the two bull markets in 2016 and 2020, the price of Bitcoin is basically moving sideways.

The difference is that before these two cycles, Bitcoin experienced a sideways trend with an upward tendency. On the other hand, in the last cycle, the black swan caused by COVID-19 gave investors additional opportunities. They can buy the dip ahead of the planned halving.

If history repeats itself, the crypto market could face a sideways trend for about a year in the long term. The Bitcoin halving, scheduled for mid-April 2024, may not have an immediate impact on Bitcoin’s price. The impact may not be felt until the last quarter of 2024 and throughout 2025.

This prediction is consistent with the trends seen on the long-term holder position chart. The indicator is currently approaching ATH. It will take about a year to reverse the trend. When long-term holders start selling after Bitcoin’s halving, it will be one of the first signals that a cryptocurrency bull run has begun.