The process of Bitcoin halving is reportedly 85% complete as of Monday, with the supply of the digital tokens held by long-term holders (LTHs) nearing its record high, according to cryptocurrency expert @therationalroot. Historically, this has signaled the approach of a macro bottom in past cycles, followed by the start of a new cycle. The long-term holders’ Bitcoin supply has traditionally served as a reliable indicator of the state of the digital currency market and has had an inverse correlation with Bitcoin’s long-term price movement.
The current Bitcoin halving cycle has shown similar sideways BTC price behavior to previous cycles, with prices remaining almost constant towards the end of the cycle. The distinction in this cycle is that Bitcoin had an upward-biased sideways trend two cycles ago, while the previous cycle offered investors an additional opportunity due to the market crash brought on by the COVID-19 pandemic.
In addition to tracking halving progress, @therationalroot also released a chart showing the supply of Bitcoin held by long-term investors. The chart revealed that the BTC supply ratio held by LTHs is currently very close to its all-time high of 76%. Historically, each time this indicator peaked, it was many months before a Bitcoin halving event took place.
The supply held by LTHs then progressively decreased following this local high and went sideways until many months after the next halving.
This pattern indicates that long-term holders are increasingly eager to sell their assets for a profit at the end of the bull market phase as a result of the rise in BTC price. Conversely, when a bear market begins, LTHs retain their assets when the market is at its lowest point. The biggest growth in LTH’s possession also occurs during such bear markets, as strong-handed investors hesitate to sell as Bitcoin prices fall.
Looking forward, the upcoming mid-2024 Bitcoin halving is attracting increasing attention from investors. If history repeats itself, the cryptocurrency market might experience a roughly one-year sideways trend. The mid-April 2024 halving of Bitcoin may not have an immediate effect on the price of BTC, with its consequences potentially not felt until the final quarter of 2024 and into 2025.
Meanwhile, pseudonymous analyst Rekt Capital has suggested that Bitcoin could witness an 18-month-long bull market after the April 2024 halving. Rekt Capital’s analysis, based on historical data, indicates that Bitcoin could top out in either mid-September 2025 or mid-October 2025. However, he also warns that Bitcoin could collapse in the months leading to the halving, potentially revisiting its macro higher low around ~$20,300 in mid-February 2024. At the time of writing on Monday, Bitcoin is worth $26,258, suggesting a potential over 22% devaluation for BTC according to Rekt Capital’s downside target.
