What history tells us about the course of the popular cryptocurrency after the halving of 2012 and 2015. The signals from the so-called hash rate and the demand for mining machines.
The next big event in the bitcoin calendar is undoubtedly the halving that is going to happen in just 6 days. We have referred several times to this phenomenon and its significance.
Today we will focus on what happened the previous times, so that we have an idea of what to expect.
The first halving took place on November 28, 2012 (blue arrow). It was then that out of 50 bitcoin fees per block, the miners started receiving 25. As we can see in the chart below, its price for 6 weeks showed a remarkable stability. On January 8, it began to rise , launching a new upward phase that launched it to $ 1,236. Yes, this is not a typo. Within a year it went up 100 times!
Earlier, from June to November 2011, there was a very large decline, of 53%. Bitcoin traded at $ 7.5 from 15.7.
The period before the second halving does not differ much in pattern. In November 2015, there was a big sharp correction, to restore the price of bitcoin to halving (blue arrow). This was followed by 4 months of relative calm, to be followed by November and then the epic course of bitcoin, where within a year it reached $ 20,000. This time it wasn't 100 times up, but just… 40!
But the similarities do not end here. After the peak, the decline that followed was 80% higher than the previous record high .
So the crucial question is, if the pattern continues, what will happen from now on? If - we repeat, if - the pattern does not change, it means that after halving and for weeks or a few months, we are not going to see an increase.
Although we do not need to mention it, let us repeat to avoid misunderstandings that the projection in the future of historical data does not mean that it will apply in the same way and with the same intensity. However, the past does not cease to be the best tool we have to guess the future. Prediction is an art, not a kind of engineering. An art that uses science to support it.
If the ratio is observed, it is not unlikely this time that the value of bitcoin will reach 10 times the value that will be found on the day of halving. If we estimate that it will be around $ 8,000, then it is not at all unlikely that we will see bitcoin at $ 80,000 . Never; Not this year, of course, but in 2021.
For 2020, the realistic goal is to exceed $ 14,000 , which is the previous peak, or even $ 20,000, the highest point it has ever reached. Repeat if the same pattern continues.
Hash Rate endures
Some have reservations about network security. They claim that many miners may leave because it will cease to be a profitable business. This can be easily seen from the Hash Rate, which shows us the amount of computing power devoted to processing transactions and securing the network.
As we can see, it is almost 10 times more powerful than it was at the top of the bitcoin price. That's when it reached $ 20,000. The more resources required for its operation, the more secure the network is.
The price of bitcoin has fallen below $ 6,000 in November 2018. And abruptly. What followed? It stayed for 6 whole months in a price range from $ 3,000 to $ 6,000. What did this mean for producers? That some could not stand such a low price and pulled the plug from their machines. From the top of 60,000,000, the hash rate dropped to 40,000,000 on average. It started to rise again when the price of bitcoin started to rise in May 2019, exceeding $ 6,000.
Will this happen again? Theoretically, it should have already happened. Not only because of the prospect of less revenue but also because of the difficulties in the supply chain due to the pandemic. The latest type of machinery is not being produced at the planned rate due to limited travel in China. Modern technology processors are even more productive. Reasonable. The more people experience mining, the more intelligent they become.
Reports suggest that demand for mining machinery exceeds supply. We have reached the conditions that existed in the last half of 2017. At that time, the processors did not manage to leave the factories and were sold like hot cakes. Demand had gradually declined in 2018, to the point where no one wanted them. It is interesting to see if the same course is repeated again.