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Speculations about Bitcoin’s halving and quantitative hardening, as well as their implications on price movement, have been an integral part of the king coin’s journey from its inception. Halvings have traditionally been associated with massive price increases, prompting experts to believe that BTC follows a four-year price cycle focused on the periodic block reward halving.
If such speculations are to be believed, it would mean that BTC’s bull run earlier this year was a result of the third halving that took place last year and the higher highs for this cycle have already been lost. In fact, according to former bull Clem Chambers, this is just the case, with the CEO of ADVFN claiming in a recent interview that BTC could soon hit the $10,000 price range. He predicted,
“I see it going under 20k easily and probably quite soon and then I see potentially a bottom around 10k but I think 12-13k is a good bottom for the market.”
Referring to this period as the Crypto-Winter, he said that the price will worsen and become stagnant over the next 2-3 years before it experiences highs again. Rekt Capital broke down this cycle into four parts last year, starting with what it called exponential highs. Price during this phase peaks, as the coin reaches new ATHs, and investor sentiment is euphoric. This is usually followed by a correction as selling pressure mounts and valuation falls.
As BTC begins to bottom out, reduced prices initiate the accumulating phase. According to the expert, now is the moment to take advantage of the best financial opportunities, as the potential for profit has considerably increased. Finally, the Recovery and Continuation phase begins, during which market psychology plays a significant role in the transition from selling to purchasing.
According to Chambers, BTC’s price movement has followed a very similar pattern over the past decade, one which was triggered by “hardening.” He added,
“It goes up like a rocket, it comes down like a rock. Every time it goes up like a rocket, it tends to double and then it comes back to a level which is basically double the low of the time before.”
Historically, the halving of Bitcoin has resulted in exponential rise in the BTC market. The initial halving happened in 2012, followed by a 3400 percent gain in price from $11 per coin to $1,150 by the end of 2013. However, after hitting a peak in 2013, its price dropped by 80%. Similarly, the 2016 halving was followed by the 2017 bull run, in which the price soared from $650 in 2016 to $19,600 by the end of December 2017 — a 4,080 percent increase.
After the May 2020 halving, Bitcoin’s price began to rise in October, reaching a new all-time high of $64,000 in April of this year before entering the corrective phase.
Many feel that the recent corrections were prompted by Elon Musk’s repeated tweets, along with China’s FUD. Chambers, on the other hand, said that this was not the case because the incident would have occurred anyway.
“When a market does something, they always want to stick it to a person.. They don’t like non-personified reasons. It’s to do with the technicals, the money flows, etc.”
With investor sentiment at an ATL and external factors along with speculation driving the market further below, what should investors do? HODL said the analyst, but only if you know the rules of the trading game.
“In a highly speculative, highly volatile, highly dangerous market, of which Bitcoin is, unless you absolutely know what you’re doing, don’t do it.”
Knowing that the cycle is going to repeat itself is paramount, Chambers concluded. He also suggested that assets should be bought when selling pressure is high and prices are low, and vice versa. His game plan for this cycle would be to buy and accumulate at the bottom over the next few years and then sell at higher highs, which he said could touch $100,000 when the ongoing cycle matures.