Have we entered the halving cycle?

First, let’s appreciate some important information about the Bitcoin halving provided by top crypto fund Pantera.

According to Pantera’s historical data statistics, each round of Bitcoin halving cycle is divided into two stages: the pre-halving cycle and the post-halving cycle, which last approximately 477 days and 480 days respectively.

The date of this round of Bitcoin halving is set on April 20, 2024. According to this date, looking back 477 days, we can determine that the start date of the halving market should be December 30, 2022. However, the actual market bottom occurred on November 9, 2022, one month earlier than originally planned. This is because the collapse of the FTX trading platform caused the market to react in advance.

According to this “chronology” (a time-based pattern), we are currently in the middle of the first half of this halving. Now let’s look at the impact of the diminishing marginal effects of the halving on this trend.

The last round of Bitcoin halving reduced the block reward from 12.5 to 6.25, while this round of halving will reduce the block reward from 6.25 to 3.125. From the perspective of absolute block output, the market impact of the halving effect will show serious marginal diminishing returns, which is also the reason for market concerns.

However, it is more important to focus on the inflation rate, which is the ratio between newly added bitcoins and mined bitcoins. Pantera uses a complex algorithm to calculate the supply inflation rate by taking the reduced bitcoin supply in 480 days as the denominator and the mined bitcoins as the numerator.

The supply inflation reduction rate of the first halving was 16.5%, the second halving was 5.5%, the previous halving was 2.4%, and the next halving will be 1.1%. This means that the rate of change in the inflation reduction rate is 33%, 43%, and 47% respectively.

Therefore, from this indicator, the marginal effect of this round of halving is slightly higher than the previous round. In the past Bitcoin halvings, the first round increased by 9212% from the price at the time of halving to the top of the market, the second round increased by 2910%, and the last round increased by 679%. There is a certain proportional relationship between these increases and the rate of change of the inflation reduction ratio.

According to this ratio, the price of this round of halving may rise by 317% to the top of the market. Therefore, the starting point of this round of halving is $35448, and the high point may reach $147843.

In summary, we have entered the middle of the first half of this round of Bitcoin halving. From the perspective of the supply inflation reduction ratio, the halving effect of this round is slightly higher than the previous round. It is hoped that as the market develops, market expectations will gradually approach this fact.