"Best Time to Buy Bitcoin is Before Halving Events," Which Is Now-ish

Colin Muller

Looposhi, a well known Twitter commentator with almost 54,000 followers, has observed the historical bitcoin trend that periods preceding Bitcoin halving events have signalled the bottom of market cycles and claims that now is the time to acquire bitcoin at low prices.

Although there have been only two halvings in bitcoin’s history - not exactly an overflowing dataset - Looposhi concentrates on the pre-2016 halving price action.

 

The Pain of 2014/18

In the bitcoin market collapse that followed the Mt. Gox hack and meltdown, the bottom of that market was found roughly 550 days before the 2016 bitcoin halving, which took place on July 9, 2016. During that window of time, bitcoin’s price traded in a zone between roughly $200-300 for about seven or eight months, before breaking that market structure and continuing to new highs - highs which were definitively obtained about seven months after the 2016 halving.

2014bear.png(source: tradingview.com)

What has become the 2018 bear market is often compared to the 2014-15 market, in terms of price action and market structure - although clearly there is no similar catastrophic catalyst to speak of. The 2014-15 bitcoin market corrected 85% from top to bottom, and the current market has done about 82.5%, leading some to think that a bottom is near.

Looposhi is arguing along these lines, implying by his illustration that the next year-plus will see a bitcoin bottom, sideways accumulation, and the eventual return to an uptrend. All of this in anticipation of the next halving, which will further reduce bitcoin’s supply. The halving will occur sometime in early- to mid-2020.

A halving is rather complicated: although it cuts mining rewards in half, bitcoin’s difficulty regime will adjust to accommodate miners leaving as a result, which eventually should rebalance the ecosystem. A temporary loss in mining power as a result of miners leaving during such a period, however, has in the past helped to stoke fears of a “death spiral” - which subject CryptoGlobe recently covered.

Looposhi is not the first to make this argument, of course. Billy Bambrough similarly pointed out this dynamic in a May 29 Forbes article, writing “While the Bitcoin price has climbed somewhat ahead of both subsequent halving events, the price has gone on to boom in the subsequent 12 or so months.” Other Twitter users have also constructed similar charts of similar predictions with respect to the halving.

Ultimately, however, price predictions are usually worth less than the virtual paper they’re scrawled on. If 2017-18 has taught us anything, it is to be careful when investing in crypto markets. Absolutely, positively none of this was financial advice.