bitcoin

$300K Bitcoin by 2022? Veteran TA Says It’s Possible, Here’s Why

Digitex Futures
• Dave Reiter
April 9, 2021

Bitcoin (BTC) has been in existence since Jan 3, 2009, when Satoshi Nakamoto mined the first 50 bitcoins into existence. Today, it seems almost impossible to believe that BTC was practically worthless for the first two years of its existence. Of course, even the most bullish Bitcoin enthusiasts were completely unprepared for the spectacular price increase that would occur over the course of the next decade.

Even though BTC has advanced exponentially since 2009, many crypto experts are forecasting substantially higher prices for the remainder of this decade. Will Bitcoin continue to grind its way higher despite the fact that prices have already increased over 400% during the past six months? Let’s take a closer look.

Obviously, accurately determining the future price of any asset class is incredibly difficult. However, we can improve our forecasting results by examining price patterns from previous bull market cycles. Bitcoin is a difficult asset to analyze because it has only been in existence for a relatively short period of time. Consequently, we have a fairly small sample of data to analyze.

It’s much easier to forecast a market with 100 years of data in comparison to an asset class like cryptocurrencies, with only 10 years of historical data. Despite the fact that BTC has a limited supply of historical data, there does appear to be a reliable price pattern that has emerged within the past decade. Let’s review the data.

Bitcoin Halving Is The “Key” To Future Price Direction

Basic economics teaches us that the price of goods and services is directly influenced by its underlying supply. As the supply increases, prices will decline. Conversely, as the supply decreases, prices will rise. This basic formula is known as the law of supply and demand, which was made famous by Adam Smith in his book, The Wealth of Nations, first published in 1776.

By examining Bitcoin’s price pattern during the past decade, it becomes quite clear that BTC has been heavily influenced by the law of supply and demand since its inception in 2009. For those who follow BTC on a regular basis, you are probably aware that all Bitcoin transactions must be verified prior to being permanently added to the blockchain.

Miners are responsible for verifying the legitimacy of each transaction. In exchange for their work, miners are rewarded with Bitcoin. When Satoshi Nakamoto released the original Bitcoin white paper in October 2008, she/he included a detailed report outlining the reward schedule for Bitcoin miners.

Based on Nakamoto’s white paper, the mining reward would be systematically reduced approximately once every four years. By lowering the mining reward, Nakamoto was essentially shrinking the number of Bitcoin in circulation. Remember, prices will rise as the underlying supply is reduced.

The reduction of mining rewards in the Bitcoin ecosystem is known as a “halving.” So far, the Bitcoin community has experienced three halving cycles since Nakamoto launched BTC in January 2009. The initial mining reward in 2009 was 50 BTC. The reward has been diminished by 50% following each halving date. The current mining reward is 6.25 BTC. This number will be reduced to 3.125 BTC on May 13, 2024.

Did the halving cycles follow Adam Smith’s law of supply and demand by pushing up the price of BTC in the wake of a supply reduction? Let’s review the results.

Halving Dates and Mining Rewards:

  • November 28, 2012 – mining reward reduced to 25 BTC
  • July 9, 2016 – mining reward reduced to 12.5 BTC
  • May 11, 2020 – mining reward reduced to 6.25 BTC
  • May 13, 2024 – mining reward reduced to 3.125 BTC

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 1

As you can see from the table, the first halving date occurred on November 28, 2012. The price on the halving date was $12.25. 18 months later, BTC had risen to $582.88. In percentage terms, Bitcoin increased by 4,658%. Clearly, the first halving cycle was extremely bullish for BTC.

Let’s examine the second halving date, which officially arrived on July 9, 2016. BTC was trading at $647.62. Once again, the reduction in mining rewards had an incredibly bullish impact on the price, as Bitcoin increased 2,146% over the course of the next 18 months.

The third halving arrived approximately 11 months ago on May 11, 2020, with a Bitcoin price tag of $8,638.11. The 18-month window will close on January 11, 2022. Will the halving cycle create another explosion in the price of Bitcoin? So far, the answer appears to be “Yes.”

BTC has advanced approximately 550% since the halving occurred in May 2020. The average price increase during the previous two halving events was 3,402%.

If Bitcoin follows the same path as the previous two halving cycles, the price will be hovering near $302,500 in January 2022.

Based on the fact that BTC is currently trading at $58,500 this price forecast seems to be wildly optimistic. However, since its inception in January 2009, Bitcoin has recorded several spectacular price increases. Therefore, it’s certainly possible that BTC could be approaching  $300K in early-2022.

The fourth BTC halving cycle is scheduled to commence on 13 May 2024, which will reduce the mining reward to 3.125 BTC. Financial historians and investment professionals have noted on several occasions that Bitcoin is the only major asset class that experiences a reduction in the circulating supply on a pre-determined basis.

This explains why BTC has achieved such an explosive price move following each halving date. Professional economists point to the Bitcoin halving cycle as verifiable proof that the law of supply and demand still works as long as speculative markets are allowed to be freely traded without being manipulated by a third party.

Examining Bitcoin with Technical Analysis

Bitcoin’s price action has been extremely bullish over the course of the past several months. Let’s examine a few popular technical indicators in an effort to determine the future price direction of BTC.

Chart 1 below covers six months of recent price action. As you can see from the chart, Bitcoin has generated a series of higher highs dating back to October 2020. This is a classic sign of a bull market. Whenever a speculative asset continues to make a series of higher highs, this is a clear indication that the underlying momentum is heavily in favor of the bulls.

The most recent high was recorded on March 15 @ 61,749. Therefore, in order to maintain the bullish momentum, BTC must penetrate 61,749 within the next few weeks.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 2

Chart 2 includes approximately seven months of historical data. The green line on the chart represents the 50-day simple moving average (SMA) of Bitcoin. In terms of technical analysis, moving averages are one of the most popular indicators within the trading community. They have been used by traders and investors for 120 years, dating back to 1901.

Moving averages can be divided into several different time frames. In regard to Bitcoin, the 50-day SMA has generated the most consistent results based on historical testing.

As you can see from the chart, a buy signal was generated on October 12, 2020, when BTC moved above the 50-day SMA @ 11,093. Bitcoin has remained above its 50-day SMA for six consecutive months. As long as the price stays above the green line on the chart, BTC will continue to remain bullish.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 3

Chart 3 displays four months of recent price activity. Bitcoin is currently trading well above the trendline. In order to drop below the bullish trendline, the price must fall below 48,609. At least for now, this type of price decline is highly unlikely.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 4

Chart 4 contains intraday price action for the past two weeks. BTC has struggled to penetrate 60K. In fact, Bitcoin has made six unsuccessful attempts to exceed 60,000 since March 18. Most likely, BTC will successfully push above 60K within the next few weeks. The momentum is still clearly in favor of the bulls.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 5

Chart 5 includes a list of the important Fibonacci support levels. BTC is currently trading comfortably above the Fib support levels. The first sign of trouble for the Bitcoin bulls would be a daily close below 50,595. It’s certainly possible for BTC to drop below the Fib support level. However, the most likely scenario is a continuation of higher prices.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 6

Based on technical analysis, Bitcoin is clearly in the middle of a raging bull market. All of the major technical indicators are currently forecasting higher prices. At least for now, the path of least resistance is to the upside.

April 9, 2021
Digitex Futures

$300K Bitcoin by 2022? Veteran TA Says It’s Possible, Here’s Why

Dave Reiter
bitcoin

Bitcoin (BTC) has been in existence since Jan 3, 2009, when Satoshi Nakamoto mined the first 50 bitcoins into existence. Today, it seems almost impossible to believe that BTC was practically worthless for the first two years of its existence. Of course, even the most bullish Bitcoin enthusiasts were completely unprepared for the spectacular price increase that would occur over the course of the next decade.

Even though BTC has advanced exponentially since 2009, many crypto experts are forecasting substantially higher prices for the remainder of this decade. Will Bitcoin continue to grind its way higher despite the fact that prices have already increased over 400% during the past six months? Let’s take a closer look.

Obviously, accurately determining the future price of any asset class is incredibly difficult. However, we can improve our forecasting results by examining price patterns from previous bull market cycles. Bitcoin is a difficult asset to analyze because it has only been in existence for a relatively short period of time. Consequently, we have a fairly small sample of data to analyze.

It’s much easier to forecast a market with 100 years of data in comparison to an asset class like cryptocurrencies, with only 10 years of historical data. Despite the fact that BTC has a limited supply of historical data, there does appear to be a reliable price pattern that has emerged within the past decade. Let’s review the data.

Bitcoin Halving Is The “Key” To Future Price Direction

Basic economics teaches us that the price of goods and services is directly influenced by its underlying supply. As the supply increases, prices will decline. Conversely, as the supply decreases, prices will rise. This basic formula is known as the law of supply and demand, which was made famous by Adam Smith in his book, The Wealth of Nations, first published in 1776.

By examining Bitcoin’s price pattern during the past decade, it becomes quite clear that BTC has been heavily influenced by the law of supply and demand since its inception in 2009. For those who follow BTC on a regular basis, you are probably aware that all Bitcoin transactions must be verified prior to being permanently added to the blockchain.

Miners are responsible for verifying the legitimacy of each transaction. In exchange for their work, miners are rewarded with Bitcoin. When Satoshi Nakamoto released the original Bitcoin white paper in October 2008, she/he included a detailed report outlining the reward schedule for Bitcoin miners.

Based on Nakamoto’s white paper, the mining reward would be systematically reduced approximately once every four years. By lowering the mining reward, Nakamoto was essentially shrinking the number of Bitcoin in circulation. Remember, prices will rise as the underlying supply is reduced.

The reduction of mining rewards in the Bitcoin ecosystem is known as a “halving.” So far, the Bitcoin community has experienced three halving cycles since Nakamoto launched BTC in January 2009. The initial mining reward in 2009 was 50 BTC. The reward has been diminished by 50% following each halving date. The current mining reward is 6.25 BTC. This number will be reduced to 3.125 BTC on May 13, 2024.

Did the halving cycles follow Adam Smith’s law of supply and demand by pushing up the price of BTC in the wake of a supply reduction? Let’s review the results.

Halving Dates and Mining Rewards:

  • November 28, 2012 – mining reward reduced to 25 BTC
  • July 9, 2016 – mining reward reduced to 12.5 BTC
  • May 11, 2020 – mining reward reduced to 6.25 BTC
  • May 13, 2024 – mining reward reduced to 3.125 BTC

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 7

As you can see from the table, the first halving date occurred on November 28, 2012. The price on the halving date was $12.25. 18 months later, BTC had risen to $582.88. In percentage terms, Bitcoin increased by 4,658%. Clearly, the first halving cycle was extremely bullish for BTC.

Let’s examine the second halving date, which officially arrived on July 9, 2016. BTC was trading at $647.62. Once again, the reduction in mining rewards had an incredibly bullish impact on the price, as Bitcoin increased 2,146% over the course of the next 18 months.

The third halving arrived approximately 11 months ago on May 11, 2020, with a Bitcoin price tag of $8,638.11. The 18-month window will close on January 11, 2022. Will the halving cycle create another explosion in the price of Bitcoin? So far, the answer appears to be “Yes.”

BTC has advanced approximately 550% since the halving occurred in May 2020. The average price increase during the previous two halving events was 3,402%.

If Bitcoin follows the same path as the previous two halving cycles, the price will be hovering near $302,500 in January 2022.

Based on the fact that BTC is currently trading at $58,500 this price forecast seems to be wildly optimistic. However, since its inception in January 2009, Bitcoin has recorded several spectacular price increases. Therefore, it’s certainly possible that BTC could be approaching  $300K in early-2022.

The fourth BTC halving cycle is scheduled to commence on 13 May 2024, which will reduce the mining reward to 3.125 BTC. Financial historians and investment professionals have noted on several occasions that Bitcoin is the only major asset class that experiences a reduction in the circulating supply on a pre-determined basis.

This explains why BTC has achieved such an explosive price move following each halving date. Professional economists point to the Bitcoin halving cycle as verifiable proof that the law of supply and demand still works as long as speculative markets are allowed to be freely traded without being manipulated by a third party.

Examining Bitcoin with Technical Analysis

Bitcoin’s price action has been extremely bullish over the course of the past several months. Let’s examine a few popular technical indicators in an effort to determine the future price direction of BTC.

Chart 1 below covers six months of recent price action. As you can see from the chart, Bitcoin has generated a series of higher highs dating back to October 2020. This is a classic sign of a bull market. Whenever a speculative asset continues to make a series of higher highs, this is a clear indication that the underlying momentum is heavily in favor of the bulls.

The most recent high was recorded on March 15 @ 61,749. Therefore, in order to maintain the bullish momentum, BTC must penetrate 61,749 within the next few weeks.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 8

Chart 2 includes approximately seven months of historical data. The green line on the chart represents the 50-day simple moving average (SMA) of Bitcoin. In terms of technical analysis, moving averages are one of the most popular indicators within the trading community. They have been used by traders and investors for 120 years, dating back to 1901.

Moving averages can be divided into several different time frames. In regard to Bitcoin, the 50-day SMA has generated the most consistent results based on historical testing.

As you can see from the chart, a buy signal was generated on October 12, 2020, when BTC moved above the 50-day SMA @ 11,093. Bitcoin has remained above its 50-day SMA for six consecutive months. As long as the price stays above the green line on the chart, BTC will continue to remain bullish.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 9

Chart 3 displays four months of recent price activity. Bitcoin is currently trading well above the trendline. In order to drop below the bullish trendline, the price must fall below 48,609. At least for now, this type of price decline is highly unlikely.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 10

Chart 4 contains intraday price action for the past two weeks. BTC has struggled to penetrate 60K. In fact, Bitcoin has made six unsuccessful attempts to exceed 60,000 since March 18. Most likely, BTC will successfully push above 60K within the next few weeks. The momentum is still clearly in favor of the bulls.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 11

Chart 5 includes a list of the important Fibonacci support levels. BTC is currently trading comfortably above the Fib support levels. The first sign of trouble for the Bitcoin bulls would be a daily close below 50,595. It’s certainly possible for BTC to drop below the Fib support level. However, the most likely scenario is a continuation of higher prices.

$300K Bitcoin by 2022? Veteran TA Says It's Possible, Here's Why 12

Based on technical analysis, Bitcoin is clearly in the middle of a raging bull market. All of the major technical indicators are currently forecasting higher prices. At least for now, the path of least resistance is to the upside.

Latest News

crypto

High Interest in Crypto Derivatives is Bullish for DGTX

Trading
• Ali Martinez
May 12, 2020

The crypto derivatives market has grown in popularity over the years. As institutional investors flock to the industry, there has been an increasing demand for crypto futures, options, and swaps offerings. Indeed, new volume records are being set constantly due to the interest for such financial products.

Data from Skew reveals that despite the high levels of volatility seen recently as speculation mounted regarding Bitcoin’s halving, the aggregate BTC futures volume today accounts for more than $35 billion. 

Huobi is currently leading the charts with a trading volume of $8.2 billion in the past 24 hours. The Singapore-based cryptocurrency exchange is followed by OKEx and Binance, which reported volumes of $7.2 billion and $6.7 billion, respectively. 

Once known as the king of the crypto derivatives market, BitMEX has fallen down to the number four spot with BTC futures volumes of $5 billion. This cryptocurrency platform may have put a permanent stain on its reputation after the massive collapse of its liquidation engine during Black Thursday in March. 

High Interest in Crypto Derivatives is Bullish for DGTX 13

BTC Futures Volumes. (Source: Skew)

Regardless, the popularity of all of these industry leaders may enter a downward trajectory as Digitex Futures is set to disrupt the entire crypto derivatives sector. 

A New Player on the Block

The new trading platform led by Adam Todd will introduce a zero-fee trading structure into the crypto derivatives market. The commission-free exchange will enable traders and market participants alike to speculate on the future price of a given asset without taking a percentage of their profits. 

When taking into consideration the current industry leaders — Huobi, OKEx, Binance, and BitMEX — they all charge considerable trading fees. Although their fee structure may seem meaningless, it makes trading strategies like scalping impossible since profits are slowly eaten up by commission fees. 

The world’s largest cryptocurrency exchange by trading volume, Binance, for instance, charges a maker fee of 0.02% and a taker fee of 0.04% on its crypto derivatives trading platform, Binance Futures. While this may not look like much at a first glance, when trades are being made using 100x leverage, that quickly becomes 2% to enter and 4% to exit a position. 

These fees are even more significant in Huobi, OKEx, and BitMEX, which are charging 0.2%, 0.1%, and 0.075%, respectively. When added up, these commissions have the ability to wipe out a trader’s small profits.

Unlike any of these cryptocurrency exchanges, Digitex Futures will allow anyone to place as many long or short positions as they wish over and over again without incurring a single fee. This is a clear advantage for traders who want to capitalize even on the smallest market fluctuations. And, it will certainly open the gates to a new wave of demand for the DGTX token, which makes all of the above possible. 

Demand for DGTX Is Expected to Rise

Having the possibility to profit in every single movement of the market will even get the average Joe interested in trading. As users of Digitex Futures will rely on DGTX to have access to the platform, the demand for this utility token will likely shoot up. 

Such a bullish outlook coincides with what can be seen from a technical perspective.

The Tom Demark (TD) Sequential indicator is currently presenting a buy signal on DGTX’s 1-day chart. The bullish formation developed in the form of a red nine candlestick. Due to the recent price action, however, it transitioned into a green one candle. 

The aforementioned technical index estimates that a further increase in the buying pressure behind DGTX will validate the optimistic outlook. If so, this altcoin could be poised to surge for one to four daily candlesticks or begin a new upward countdown. 

High Interest in Crypto Derivatives is Bullish for DGTX 14

TD Setup Presents a Buy Signal For DGTX. (Source: TradingView)

Adding credence to the bullish outlook, the corrective phase that DGTX went through since early April allowed it to hit the 50% Fibonacci retracement level. Although DGTX barely touched the 38.2% Fibonacci retracement level as forecasted last week, around the 50% Fibonacci retracement level is where most of the price action took place.

Based on Gann’s 50% retracement theory, this Fibonacci level presents a crucial opportunity to “buy the dip.” If DGTX is able to bounce off this area with enough volume behind it, it could rapidly rise and reach higher highs. 

Otherwise, it may present another opportunity for sidelined investors to get back into the market. 

High Interest in Crypto Derivatives is Bullish for DGTX 15

DGTX Bounces Off the 50% Fib Level. (Source: TradingView)

With Bitcoin’s halving now written into the history books and Digitex Futures preparing to launch fully to the public this summer, it is just a matter of time before DGTX achieves its upside potential leaving competitors in the dust. 

 

May 12, 2020
Trading

High Interest in Crypto Derivatives is Bullish for DGTX

Ali Martinez
crypto

The crypto derivatives market has grown in popularity over the years. As institutional investors flock to the industry, there has been an increasing demand for crypto futures, options, and swaps offerings. Indeed, new volume records are being set constantly due to the interest for such financial products.

Data from Skew reveals that despite the high levels of volatility seen recently as speculation mounted regarding Bitcoin’s halving, the aggregate BTC futures volume today accounts for more than $35 billion. 

Huobi is currently leading the charts with a trading volume of $8.2 billion in the past 24 hours. The Singapore-based cryptocurrency exchange is followed by OKEx and Binance, which reported volumes of $7.2 billion and $6.7 billion, respectively. 

Once known as the king of the crypto derivatives market, BitMEX has fallen down to the number four spot with BTC futures volumes of $5 billion. This cryptocurrency platform may have put a permanent stain on its reputation after the massive collapse of its liquidation engine during Black Thursday in March. 

High Interest in Crypto Derivatives is Bullish for DGTX 16

BTC Futures Volumes. (Source: Skew)

Regardless, the popularity of all of these industry leaders may enter a downward trajectory as Digitex Futures is set to disrupt the entire crypto derivatives sector. 

A New Player on the Block

The new trading platform led by Adam Todd will introduce a zero-fee trading structure into the crypto derivatives market. The commission-free exchange will enable traders and market participants alike to speculate on the future price of a given asset without taking a percentage of their profits. 

When taking into consideration the current industry leaders — Huobi, OKEx, Binance, and BitMEX — they all charge considerable trading fees. Although their fee structure may seem meaningless, it makes trading strategies like scalping impossible since profits are slowly eaten up by commission fees. 

The world’s largest cryptocurrency exchange by trading volume, Binance, for instance, charges a maker fee of 0.02% and a taker fee of 0.04% on its crypto derivatives trading platform, Binance Futures. While this may not look like much at a first glance, when trades are being made using 100x leverage, that quickly becomes 2% to enter and 4% to exit a position. 

These fees are even more significant in Huobi, OKEx, and BitMEX, which are charging 0.2%, 0.1%, and 0.075%, respectively. When added up, these commissions have the ability to wipe out a trader’s small profits.

Unlike any of these cryptocurrency exchanges, Digitex Futures will allow anyone to place as many long or short positions as they wish over and over again without incurring a single fee. This is a clear advantage for traders who want to capitalize even on the smallest market fluctuations. And, it will certainly open the gates to a new wave of demand for the DGTX token, which makes all of the above possible. 

Demand for DGTX Is Expected to Rise

Having the possibility to profit in every single movement of the market will even get the average Joe interested in trading. As users of Digitex Futures will rely on DGTX to have access to the platform, the demand for this utility token will likely shoot up. 

Such a bullish outlook coincides with what can be seen from a technical perspective.

The Tom Demark (TD) Sequential indicator is currently presenting a buy signal on DGTX’s 1-day chart. The bullish formation developed in the form of a red nine candlestick. Due to the recent price action, however, it transitioned into a green one candle. 

The aforementioned technical index estimates that a further increase in the buying pressure behind DGTX will validate the optimistic outlook. If so, this altcoin could be poised to surge for one to four daily candlesticks or begin a new upward countdown. 

High Interest in Crypto Derivatives is Bullish for DGTX 17

TD Setup Presents a Buy Signal For DGTX. (Source: TradingView)

Adding credence to the bullish outlook, the corrective phase that DGTX went through since early April allowed it to hit the 50% Fibonacci retracement level. Although DGTX barely touched the 38.2% Fibonacci retracement level as forecasted last week, around the 50% Fibonacci retracement level is where most of the price action took place.

Based on Gann’s 50% retracement theory, this Fibonacci level presents a crucial opportunity to “buy the dip.” If DGTX is able to bounce off this area with enough volume behind it, it could rapidly rise and reach higher highs. 

Otherwise, it may present another opportunity for sidelined investors to get back into the market. 

High Interest in Crypto Derivatives is Bullish for DGTX 18

DGTX Bounces Off the 50% Fib Level. (Source: TradingView)

With Bitcoin’s halving now written into the history books and Digitex Futures preparing to launch fully to the public this summer, it is just a matter of time before DGTX achieves its upside potential leaving competitors in the dust. 

 

Latest News

Will the Next Bitcoin Halving Unleash a New Crypto Bull Market? 19

Will the Next Bitcoin Halving Unleash a New Crypto Bull Market?

Crypto Industry
Digitex Futures
Trading
• Dave Reiter
February 27, 2020

With the exception of May and June, 2019 was a rather uneventful year for Bitcoin and the entire crypto universe. Bitcoin traded sideways-to-lower following its price peak on 26 June (see Chart #1 below). Although the number-one cryptocurrency has started 2020 with a bang representing a 44% rate of return so far this year, cryptocurrencies still need some type of event to serve to reestablish a new bull market. It wasn’t the launch of Bakkt, so could it be the next Bitcoin halving?

The Next Crypto Bull Market

Many traders and investors within the crypto community expected the launch of Bakkt to generate a new wave of buying pressure for BTC and other cryptocurrencies. However, buying never materialized. In fact, Bitcoin was much lower shortly afterward in comparison to the Bakkt launch date on 23 September (see Chart #2 below). 

What will it take to unleash a new crypto bull market? Has it already begun? Many cryptocurrency traders are convinced that the next Bitcoin halving in May 2020 will create a powerful new bull market. But what is the Bitcoin halving and why could it generate a new run? Let’s explore the details.

Bitcoin Halving Has a Perfect Track Record for Launching Bull Markets       

Arguably, Bitcoin’s greatest feature is the fact that Satoshi Nakamoto only created 21 million coins. There will never be more than 21 million bitcoins in circulation. It was pure “genius” for Nakamoto to strictly limit the supply of BTC. This is what separates BTC from fiat currencies. Without having a limited amount of bitcoins, cryptocurrencies would be no better than paper currencies.

BTC and other cryptos would eventually become worthless in terms of purchasing power. Of course, this is exactly what has befallen fiat currencies. Their purchasing power has slowly eroded over the course of the past several decades. By restricting the number of bitcoins, cryptocurrency investors will never have to deal with this decline in purchasing power. This is what makes cryptocurrencies an excellent store of value.

As you know, bitcoins are entered into circulation through the process of mining. Essentially, BTC mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. Added together, these past transactions create a chain of blocks, known as a blockchain. Miners are rewarded when a new block is discovered. Currently, the reward is 12.5 BTC.

In addition to limiting the number of bitcoins to 21 million, Nakamoto made a brilliant decision to gradually reduce the mining reward as new bitcoins were added into circulation. The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, which should occur approximately every four years. Ultimately, this will result in a total of 21 million Bitcoins in circulation.                 

The Importance of Capping Bitcoin’s Supply

Why was Nakamoto’s decision to reduce the mining reward such a brilliant decision? Because it dramatically increases the odds of a steady increase in the price of Bitcoin well into the future. A reduction in the BTC mining reward is known as a “Bitcoin halving.” 

Whenever a halving occurs, it automatically reduces the BTC mining reward by 50%. As discussed earlier, the current Bitcoin mining reward is 12.5 bitcoins for the discovery of a new block. The next Bitcoin halving is scheduled for May 2020, when the mining reward will be cut in half to 6.25 BTC. 

What has happened to the price of BTC during previous Bitcoin halving occurrences? Let’s examine the data.

Pssst… It isn’t just Bitcoin that’s got sky’s the limit potential… If you want to get involved in the next revolution in crypto derivatives trading, you can buy our native exchange token DGTX by clicking on the button below. You’ll get an instant transaction with zero slippage buying directly from the Digitex Treasury including a 10% bonus airdropped into your account upon the mainnet launch.

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BTC Price After Bitcoin Halving

The first Bitcoin halving occurred on 28 November 2012, when the mining reward was reduced to 25 bitcoins. At the time of the halving, the price of BTC was approximately $11. Over the course of the next 12 months, Bitcoin enjoyed a dramatic bull market. BTC reached a peak of $1,135 on 29 November 2013. 

This represents an amazing price increase of 10,218%. 

The next Bitcoin halving occurred on 16 July 2016. The mining reward was reduced to 12.5 bitcoins per block. What happened to the price of BTC following the reduction in the mining reward? Initially, nothing. 

In fact, for several months after the mining reward was reduced, BTC was locked in a boring trading range between $500 and $800. The trading range continued for five months, July through December 2016.

Many traders in the crypto community began to doubt whether the 2016 halving would generate a substantial rally similar to the 2012 halving. Finally, on 21 December 2016, BTC generated a bullish breakout, when the price penetrated $800. The halving rally was underway! 

Bitcoin exploded to the upside throughout the next 12 months. The final top was obtained on 18 December 2017 @ $19,862. In percentage terms, BTC enjoyed a rally of 2,847%. Please review the following table. 

Bitcoin Halving

2012 – 2016 

Halving Date         Bitcoin Price          Price Peak             Peak Date  % Increase

 

28 Nov 2012          11                           1,135                      29 Nov 2013  10,218%

 

16 Jul 2016            674                         19,862                   18 Dec 2017  2,847%

 

Source  Forbes Magazine

Will the May 2020 Bitcoin Halving Unleash a Bull Market? 

Of course, it’s impossible to predict the future direction of any speculative asset. However, based on previous Bitcoin halving occurrences, it’s fairly safe to assume that BTC will generate some type of rally following the May 2020 halving. Let’s attempt to calculate an educated guess regarding the size of the rally.

Unfortunately, we only have two previous Bitcoin halving episodes. Therefore, our data sample is very small. Let’s assume that BTC is trading near its current price of $7,400 in May 2020. Given the fact that BTC is trading at a substantially higher price compared to the 2012 halving and 2016 halving, it’s highly unlikely that Bitcoin will enjoy such a dramatic percentage price increase for the May 2020 halving.

In fact, you can see that there was a dramatic reduction in percentage gains in 2016 versus 2012. Bitcoin’s gain from the 2016 halving was 72% less than the gain from the 2012 halving.

 In an attempt to calculate a price forecast for the upcoming May 2020 halving, let’s assume that the Bitcoin halving rally will be 72% less than the 2016 halving rally. If we use these numbers in our calculation, we can conclude that BTC will enjoy a substantial gain of 797%. 

Based on a price of $7,400, Bitcoin will reach a peak of $58,978 within 12 to 18 months from May 2020. Therefore, the price peak will occur between May 2021 and November 2021.

Of course, nobody should take these forecasts too seriously. Several things can change within the crypto universe before May 2020. Additionally, there is absolutely no guarantee that Bitcoin will rally following the May 2020 halving. There is no rule which says that BTC must rally following each halving. 

However, given the fact that the BTC mining reward will be cut in half, it’s probably safe to assume that there will be at least a modest rally. Without question, it will be very exciting to watch the price of Bitcoin as we approach the May 2020 halving.

JOIN NOW

Full Disclosure: I own BTC on the spot market, BTC futures and BTC exchange-traded notes.  

 

 

February 27, 2020
Crypto Industry
Digitex Futures
Trading

Will the Next Bitcoin Halving Unleash a New Crypto Bull Market?

Dave Reiter
Will the Next Bitcoin Halving Unleash a New Crypto Bull Market? 20

With the exception of May and June, 2019 was a rather uneventful year for Bitcoin and the entire crypto universe. Bitcoin traded sideways-to-lower following its price peak on 26 June (see Chart #1 below). Although the number-one cryptocurrency has started 2020 with a bang representing a 44% rate of return so far this year, cryptocurrencies still need some type of event to serve to reestablish a new bull market. It wasn’t the launch of Bakkt, so could it be the next Bitcoin halving?

The Next Crypto Bull Market

Many traders and investors within the crypto community expected the launch of Bakkt to generate a new wave of buying pressure for BTC and other cryptocurrencies. However, buying never materialized. In fact, Bitcoin was much lower shortly afterward in comparison to the Bakkt launch date on 23 September (see Chart #2 below). 

What will it take to unleash a new crypto bull market? Has it already begun? Many cryptocurrency traders are convinced that the next Bitcoin halving in May 2020 will create a powerful new bull market. But what is the Bitcoin halving and why could it generate a new run? Let’s explore the details.

Bitcoin Halving Has a Perfect Track Record for Launching Bull Markets       

Arguably, Bitcoin’s greatest feature is the fact that Satoshi Nakamoto only created 21 million coins. There will never be more than 21 million bitcoins in circulation. It was pure “genius” for Nakamoto to strictly limit the supply of BTC. This is what separates BTC from fiat currencies. Without having a limited amount of bitcoins, cryptocurrencies would be no better than paper currencies.

BTC and other cryptos would eventually become worthless in terms of purchasing power. Of course, this is exactly what has befallen fiat currencies. Their purchasing power has slowly eroded over the course of the past several decades. By restricting the number of bitcoins, cryptocurrency investors will never have to deal with this decline in purchasing power. This is what makes cryptocurrencies an excellent store of value.

As you know, bitcoins are entered into circulation through the process of mining. Essentially, BTC mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. Added together, these past transactions create a chain of blocks, known as a blockchain. Miners are rewarded when a new block is discovered. Currently, the reward is 12.5 BTC.

In addition to limiting the number of bitcoins to 21 million, Nakamoto made a brilliant decision to gradually reduce the mining reward as new bitcoins were added into circulation. The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, which should occur approximately every four years. Ultimately, this will result in a total of 21 million Bitcoins in circulation.                 

The Importance of Capping Bitcoin’s Supply

Why was Nakamoto’s decision to reduce the mining reward such a brilliant decision? Because it dramatically increases the odds of a steady increase in the price of Bitcoin well into the future. A reduction in the BTC mining reward is known as a “Bitcoin halving.” 

Whenever a halving occurs, it automatically reduces the BTC mining reward by 50%. As discussed earlier, the current Bitcoin mining reward is 12.5 bitcoins for the discovery of a new block. The next Bitcoin halving is scheduled for May 2020, when the mining reward will be cut in half to 6.25 BTC. 

What has happened to the price of BTC during previous Bitcoin halving occurrences? Let’s examine the data.

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BTC Price After Bitcoin Halving

The first Bitcoin halving occurred on 28 November 2012, when the mining reward was reduced to 25 bitcoins. At the time of the halving, the price of BTC was approximately $11. Over the course of the next 12 months, Bitcoin enjoyed a dramatic bull market. BTC reached a peak of $1,135 on 29 November 2013. 

This represents an amazing price increase of 10,218%. 

The next Bitcoin halving occurred on 16 July 2016. The mining reward was reduced to 12.5 bitcoins per block. What happened to the price of BTC following the reduction in the mining reward? Initially, nothing. 

In fact, for several months after the mining reward was reduced, BTC was locked in a boring trading range between $500 and $800. The trading range continued for five months, July through December 2016.

Many traders in the crypto community began to doubt whether the 2016 halving would generate a substantial rally similar to the 2012 halving. Finally, on 21 December 2016, BTC generated a bullish breakout, when the price penetrated $800. The halving rally was underway! 

Bitcoin exploded to the upside throughout the next 12 months. The final top was obtained on 18 December 2017 @ $19,862. In percentage terms, BTC enjoyed a rally of 2,847%. Please review the following table. 

Bitcoin Halving

2012 – 2016 

Halving Date         Bitcoin Price          Price Peak             Peak Date  % Increase

 

28 Nov 2012          11                           1,135                      29 Nov 2013  10,218%

 

16 Jul 2016            674                         19,862                   18 Dec 2017  2,847%

 

Source  Forbes Magazine

Will the May 2020 Bitcoin Halving Unleash a Bull Market? 

Of course, it’s impossible to predict the future direction of any speculative asset. However, based on previous Bitcoin halving occurrences, it’s fairly safe to assume that BTC will generate some type of rally following the May 2020 halving. Let’s attempt to calculate an educated guess regarding the size of the rally.

Unfortunately, we only have two previous Bitcoin halving episodes. Therefore, our data sample is very small. Let’s assume that BTC is trading near its current price of $7,400 in May 2020. Given the fact that BTC is trading at a substantially higher price compared to the 2012 halving and 2016 halving, it’s highly unlikely that Bitcoin will enjoy such a dramatic percentage price increase for the May 2020 halving.

In fact, you can see that there was a dramatic reduction in percentage gains in 2016 versus 2012. Bitcoin’s gain from the 2016 halving was 72% less than the gain from the 2012 halving.

 In an attempt to calculate a price forecast for the upcoming May 2020 halving, let’s assume that the Bitcoin halving rally will be 72% less than the 2016 halving rally. If we use these numbers in our calculation, we can conclude that BTC will enjoy a substantial gain of 797%. 

Based on a price of $7,400, Bitcoin will reach a peak of $58,978 within 12 to 18 months from May 2020. Therefore, the price peak will occur between May 2021 and November 2021.

Of course, nobody should take these forecasts too seriously. Several things can change within the crypto universe before May 2020. Additionally, there is absolutely no guarantee that Bitcoin will rally following the May 2020 halving. There is no rule which says that BTC must rally following each halving. 

However, given the fact that the BTC mining reward will be cut in half, it’s probably safe to assume that there will be at least a modest rally. Without question, it will be very exciting to watch the price of Bitcoin as we approach the May 2020 halving.

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Full Disclosure: I own BTC on the spot market, BTC futures and BTC exchange-traded notes.  

 

 

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