The price of Bitcoin soared the following year after the halving! Will the 7-year historical pattern of Bitcoin repeat itself?

According to data from the bitcoinblockhalf website, based on the current block production speed, the next Bitcoin mining reward halving is expected to be on May 23, 2020, which is less than 390 days away.

Twitter user "planB" recently tweeted that according to the trend tracking indicator "Stock-Flow Consistency Model", the price of Bitcoin is very likely to break through the $10,000 mark after the halving, and is even expected to soar to an astronomical figure of $100,000 in 2020.

What does the stock- flow model mean?

The above figure shows the relationship between the halving of Bitcoin mining rewards and the BTC price. Judging from the BTC price trend, it is almost consistent with the trend of the stock-flow consistency model in macroeconomics.

The stock-flow consistency model is based on post-Keynesian economic theory and was developed by many economists including Godley. It returned to the mainstream of macroeconomic analysis after the US subprime mortgage crisis in 2007.

It is reported that the model not only examines the stocks such as physical capital, financial assets and liabilities, but also examines the flows generated by physical and financial transactions, and examines the mutual influence between stocks and flows based on the principle of consistency in stock-flow accounting.

From the model, the BTC price is on an upward trend. It is worth noting that the halving of Bitcoin supply is expected to greatly reduce selling pressure, and fewer bearish people may also help push the BTC price higher.

However, the reduction in selling pressure does not mean an increase in buyer interest. The BTC price rebound caused by the halving may be hindered, and it is possible to quickly enter an overbought state, causing the BTC price to fall sharply in the later period .

Halving Countdown

According to the pre-set, Bitcoin will experience a halving of mining rewards every four years on average. The current Bitcoin mining reward is 12.5 BTC, which will become 6.25 BTC after the halving in May next year.

The halving of block rewards will lead to an increase in mining costs and a halving of output, which will have a significant supporting effect on the BTC price and its intrinsic value.

Judging from historical data, BTC prices tend to rebound one year after halving .

In November 2012, Bitcoin mining rewards experienced their first halving, when the block reward was halved from 50 BTC to 25 BTC. A year later, the BTC price broke through the major barrier of $1,000 for the first time in November 2013, setting a new record high. In July 2016, the Bitcoin block reward was halved again from 25 BTC to 12.5 BTC. In the following year, the BTC price soared all the way, breaking through many barriers and finally reaching a peak level of $20,000, opening the super bull market in 2017.

Although the current BTC price has experienced a pullback, FXStreet analyst Tanya Abrosimova said that the current downward correction of BTC has not affected its recent upward trend. The BTC daily line is still running in the rising channel and remains above the middle track of the Bollinger Band, so the current downward correction is a normal correction.

Judging from Bitcoin’s past performance, the next block reward halving is bound to become another important cornerstone in Bitcoin’s history. Although the market still disagrees on how high the BTC price can climb after the halving, it is certain that Bitcoin will most likely repeat the historical pattern of soaring prices after the halving.

Author: Gu Mengting

Source: Scallion Blockchain

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