Crypto Market Outlook: Bitcoin Halving, Supply Trends, and Bullish Outlook

The cryptocurrency market is entering a very interesting phase, with Bitcoin’s halving event, scheduled for mid-April 2024, gaining more and more attention from investors. If history repeats itself, a full-fledged bull run won’t begin until next year at the earliest.

According to the latest data, Bitcoin’s halving event is 85% complete. At the same time, the supply of Bitcoin held by long-term holders (LTH) is close to an all-time high (ATH). In past cycles, this has often been a signal that a macro bottom is imminent, followed by the early stages of a new cycle.

Supply held by long-term holders is near all-time highs

Historically, the supply of Bitcoin in the hands of long-term holders has been an important indicator of the health of the cryptocurrency market. This indicator is usually negatively correlated with the long-term price trend of major cryptocurrencies. During market bottoms, long-term holders hold on to their assets and do not sell easily. This phenomenon often occurs when the market experiences a sharp decline. They firmly believe that the cryptocurrency market will rebound in the future, so they hold on.

In contrast, during the crash of a bull market, the situation is completely different. The sharp rise in Bitcoin prices causes long-term holders to be more willing to sell their assets to make a profit. According to historical data, during each major bull market, the supply held by long-term holders decreases sharply. These Bitcoins are then transferred to short-term holders as they seek quick profits and join the market in the late stage of the bull market.

Cryptocurrency analyst @therationalroot posted a chart of the Bitcoin supply in the hands of long-term holders on social media, and added the time points of each Bitcoin halving event to the chart. From this chart, we can first see that the current share of Bitcoin supply in the hands of long-term holders is close to the historical high of 76%. This level was set in late 2015, when the Bitcoin price ended the accumulation period before the second halving.

The chart also shows that this indicator reaches a peak for a given cycle a few months before each Bitcoin halving event (green circle). Then, after reaching this peak, the supply in the hands of long-term holders gradually declines and stabilizes until a few months after the next halving event. Usually, this indicator shows a significant decline within about 6 months after the halving event, which marks the stage of a mature bull market in the cryptocurrency market.

Bitcoin’s halving event is 85% complete

The analyst also published another chart comparing the historical time periods between the previous 3 halving cycles. According to @therationalroot, Bitcoin’s halving event is now 85% complete. Meanwhile, the relatively small 15% end-of-cycle period is characterized by sideways movement in Bitcoin’s price. In both cycles, in 2016 and 2020, the price of the main cryptocurrency maintained a similar trend.

Unlike the previous cycle, Bitcoin experienced sideways and upward fluctuations. On the other hand, in the recent cycle, investors have additional opportunities due to the black swan event caused by COVID-19. They can take attractive positions before the scheduled halving event.

If history repeats itself, the cryptocurrency market could experience about a year of sideways movement in the long term. The Bitcoin halving event, scheduled for mid-April 2024, may not affect the price of Bitcoin immediately. Its effects may not be felt until the last quarter of 2024 and throughout 2025. This forecast is consistent with the trend shown on the supply chart in the hands of long-term holders. Currently, this indicator is close to its all-time high, and it will take about 12 months to reverse the trend and enter a phase of supply reduction. When long-term holders start selling Bitcoin, it will be the first signal that the cryptocurrency bull run is about to begin.