Binance, a prominent player in the crypto space, has prominently featured a countdown to the Bitcoin halving on its homepage, underscoring the importance of this event. While emphasizing the inherent uncertainty in predicting future outcomes, Changpeng Zhao (CZ), the CEO of Binance, imparts insights from his observations of the three previous Bitcoin halvings.
Binance’s CZ says Bitcoin’s price will not double overnight
Leading up to a Bitcoin halving, CZ notes there is usually a surge in discussions, news coverage, and overall enthusiasm in the crypto community. This period is characterized by heightened anticipation, speculation, and a positive outlook among Bitcoin supporters. He added that the halving event is often seen as a critical juncture that could shape the cryptocurrency’s future.
Contrary to some expectations, CZ points out that the Bitcoin price doesn’t typically undergo an immediate twofold increase overnight after the halving. That can lead to queries and perplexity among those anticipating an abrupt upswing. It’s crucial to recognize that the effects of a halving event may take time to materialize in the market.
Historically, in the year following a Bitcoin halving, the cryptocurrency has achieved numerous all-time highs (ATHs) in terms of its price. This trend often triggers retrospection from individuals wondering the reason behind the surge. CZ emphasizes that people have short memories and may not readily link the price spikes to the halving event.
Interestingly, the year following a Bitcoin halving often presents a different narrative—a succession of All-Time Highs (ATH) in Bitcoin’s price. The community, still recalling the initial post-halving stagnation, now contemplates the catalysts driving these bullish trends. The memory of the once-doubting community fades, replaced by amazement and new questions about the factors fueling the unforeseen price surges.
While CZ’s insights offer a captivating glimpse into the historical patterns surrounding Bitcoin halvings, he underscores a crucial caveat: past performance does not guarantee future results. In cryptocurrencies’ inherently volatile and uncertain realm, previous trends do not necessarily foreshadow future outcomes.
Supply held by long-term holders approach ATH, backing CZ
The metric tracking BTC supply held by long-term holders has historically been a reliable gauge of the cryptocurrency market’s overall health. This measure has exhibited a consistent negative correlation with the extended price performance of the largest cryptocurrency.
Long-term hodlers, or those who steadfastly retain their assets, tend to refrain from making any movements during market downturns. Notably, the most substantial increase in supply held by long-term holders occurs during severe bear markets. In these periods, investors with unwavering confidence in the potential of BTC are hesitant to part with their holdings. They maintain their coins, convinced that the cryptocurrency market will rebound, yielding a profitable investment return.
Conversely, during a thriving bull market, the upswing in BTC price prompts long-term holders to become progressively more inclined to sell their assets for a profit. Throughout history, major bull markets have had a notable decline in supply held by long-term holders. Subsequently, the coins transition into the possession of short-term holders, who enter the market in later stages driven by the pursuit of quick gains.
If historical trends were to replicate themselves, the broader outlook for the cryptocurrency market might entail a roughly one-year period of sideways movement. The Bitcoin halving, scheduled for mid-April 2024, might not immediately impact BTC’s price. Its effects may only become evident in the latter part of 2024 and persist throughout 2025.
This forecast aligns with the patterns observed in the chart tracking supply held by long-term holders. Presently, this indicator is approaching an all-time high. It is anticipated to take about 12 months to shift its trajectory and transition into a distribution phase. Once long-term holders commence selling after the Bitcoin halving, it could serve as one of the initial signals heralding the onset of a cryptocurrency bull run.
