Can Bitcoin halving alone drive the next bull market?

The previous article shared with you the market analysis of the bull market brought about by the Bitcoin halving. This halving will still bring a bull market as in the past. Of course, this bull market will not bring the overall market value of digital currency to the size of the stock market, nor will it make Bitcoin popular enough for the general public to participate.

So what might happen if there is a market trend during this halving?

Let’s first review the last halving in 2016.

The last Bitcoin halving occurred in July 2016. Between July and December 2016, Bitcoin hovered between $500 and $700 for a long time, which means that the halving effect did not occur immediately in the year when the halving occurred.

However, in 2017, Bitcoin began to rise all the way, reaching a high of around $20,000 in December 2017.

Why is this happening? I think one of the most important reasons is the speculation frenzy caused by Ethereum's ICO, which has attracted funds from outside the industry to enter the market. After the speculative funds from outside the industry entered the market, they not only crazily pursued various ICO projects, but also formed a big bull market.

The ICO craze of Ethereum did not suddenly appear in 2017, but gradually developed since 2016. It was not until its wealth effect began to attract the attention of off-market funds that it caused a surge.

Let’s continue to look at the Bitcoin halving in 2012:

The Bitcoin halving in 2012 took place in November. However, between November of that year and July 2013, Bitcoin hovered below $100 for a long time, which means that more than half a year after the halving, there was no increase in the price due to the halving effect.

It was not until October 2013 that Bitcoin began to rise from $200, reaching a high of over $1,000 in December 2013.

Comparing these two bull markets, there are two rules:

First, the halving effect will not occur immediately after the halving. It took at least half a year after the two halvings before the real sharp rise began.

Second, if the halving is the only factor and there are no other factors to stimulate it, the halving effect will exist but it will not be strong.

During the second halving, the stimulus brought by Ethereum ICO caused Bitcoin to rise from less than US$1,000 to US$20,000, at least a 20-fold increase; while the first halving, relying solely on itself, only caused Bitcoin to rise from US$100 to US$1,000, a 10-fold increase.

In addition, for the halving cycle to have an effect, there must be a trigger. From this perspective, the trigger for the second halving is very obvious, which is ICO; and the trigger for the first halving may be the low price and price fluctuations of Bitcoin that aroused the curiosity of speculative funds from outsiders. With a Bitcoin price of around $100, a little capital entering the market can manipulate the price. Once this speculative effect reaches a certain level, it will drive subsequent funds to enter the market continuously, thus forming a bull market.

How will this halving play out? History will not simply repeat itself, but there are always patterns to follow.

1. Let’s first look at the trigger of the halving effect.

In the face of the upcoming halving, so far I have not seen any triggers other than the halving factor, similar to the ICO in 2017.

Therefore, if we judge only by the halving factor, we can only compare it with the market in 2013. But the difference between this time and 2013 is that Bitcoin was only $100 at that time, while now Bitcoin is $10,000. The volume is incomparable, and the funds required are also incomparable.

In the absence of convenient channels for large external funds to freely enter and exit this market, I believe that even if the halving effect exists, it will not be very strong.

Is it possible that there will be another trigger from other fields this time, similar to the ICO in 2017? Maybe in some fields or applications, there is a spark that will spread like wildfire, but most people have not noticed it yet.

This fuse needs a certain amount of time to grow to a certain scale before it can attract large-scale outside funds to enter the market again.

But I estimate that even if there is, it will probably be next year at the earliest, and it is unlikely to be this year because there is not enough time.

2. How much is the possible increase in Bitcoin price after this halving?

If the current bull market is really caused by the halving alone, then it is very likely that this bull market caused by the halving will only be a small bull market, and it is impossible to have a big bull market like the one in 2017.

Under such circumstances, the price of Bitcoin may not rise too high, conservatively estimated to be between US$20,000 and US$50,000.

If this bull market is accompanied by the emergence of phenomenal technology or applications in its industry, the increase may be even more optimistic.

Today's Fear & Greed Index (FGI) is 46

Compared with yesterday's 43, the degree of fear has weakened. The FGI index is inversely proportional to the market state, with 0 meaning "extreme fear" and 100 meaning "extreme greed."

Global Blockchain Index (GBI) 11002.53

The GBI index reflects the macro trend of the blockchain asset market. The peak index of the last bull market was 22570. The better the market conditions, the higher the index.