The Bitcoin Halving and the Bitcoin Market Cycle

The Bitcoin halving, occurring approximately every four years, has been a pivotal event in the market dynamics of Bitcoin and the whole crypto market. As the issuance of new Bitcoin is halved, the event has historically been associated with significant impacts on the crypto market and its cycles. Analyzing the time-based cyclical patterns around the previous Bitcoin halvings reveals intriguing insights on how the halving could be one of the drivers behind Bitcoin’s market dynamics.

Since its genesis block in 2009, the Bitcoin network has experienced three halvings and in the past, the Bitcoin halving combined with a constant or increasing demand for Bitcoin has so far tended to put upward pressure on the price. Up until the present, the market experienced a surge in bullish sentiment in the lead-up to the halving, driven by anticipation of the supply reduction. This pattern suggests a cyclical nature, with the halving acting as a potential catalyst for Bitcoin and crypto market cycles.

We conducted an analysis of the first three Bitcoin halvings and the market cycles which accompanied the market development since then in regard to time pivots. We focused on quantifying the temporal intervals between each halvings and the subsequent Bitcoin market cycle price peak, followed by the durations from the Bitcoin market cycle price peak to the following Bitcoin market cycle bottom, and ultimately from the price bottom to the subsequent halving.

Bitcoin halving cycles

In the chart below, we can see the duration between the past halvings in days. The second halving took place 1’320 days after the first, the third halving 1’403 days after the second and the upcoming fourth halving is projected to take place 1’441 days after the third halving, which leaves us with an average of 1’388 days between the halvings.

When including the Bitcoin market cycles, the analysis was limited to the Bitcoin price peaks occurring in November 2013, December 2017, and November 2021. Correspondingly, the identified Bitcoin price bottoms were situated in January 2015, December 2018, and November 2022. We excluded data related to the interim Bitcoin price peak in April 2013, which was accompanied by a bottom in July 2013, as well as the COVID-19 crash in March 2020.

By examining these temporal relationships, our analysis aims to provide insights into the historical patterns and dynamics of Bitcoin's market cycles, contributing to a more nuanced understanding of its development over time in relation to the Bitcoin halvings.

Bitcoin market cycle overview

The first Bitcoin halving occurred on November 28, 2012, marking the onset of the first post halving market cycle. Approximately 367 days later, by the end of November 2013, Bitcoin reached its peak. Subsequently, a correction unfolded over the next 410 days, leading to a bottom in January 2015. Which was roughly 542 days prior to the second halving in July 2016.

On July 9, 2016, the second Bitcoin halving event took place, starting a renewed uptrend for Bitcoin and crypto markets. Approximately 526 days after the halving, a new market cycle top was reached in December 2017. Following this all-time high, Bitcoin and the broader crypto market underwent a subsequent bear market, enduring for 363 days and hitting a bottom in December 2018. This 2018 market cycle bottom materialized roughly 512 days before the onset of the third halving in May 2020, showcasing, for the first time, the potentially cyclical nature and interconnectedness of halving events and Bitcoin market trends.

On May 11, 2020, the third Bitcoin halving initiated a renewed upward trajectory in both Bitcoin and the broader crypto markets. Subsequently, after approximately 547 days post-halving, a new top in the market cycle was achieved in November 2021 with a new all-time high. Following this high, Bitcoin and the crypto market experienced a bearish phase that persisted for 376 days, culminating in a new market bottom in November 2022. Notably, this market cycle bottom in 2022 took place roughly 515 days prior to the fourth Bitcoin halving, which is expected to happen on April 20, 2024.

With the analysis of the above-mentioned temporal metrics, noticeable parallels can be observed among the three preceding Bitcoin halving cycles. From today’s perspective, looking back at the market development of the last twelve to sixteen months and considering this analysis, one could be of the opinion that the 2022 market bottom may actually have been the market cycle bottom for Bitcoin.

A closer look at the time pivots

In the last paragraph of this article, we are taking a closer look at the average duration between these pivotal points in Bitcoin’s market cycle, namely the Bitcoin market cycle peaks, bottoms and the halvings. While past performance is never a guarantee for future results and external factors and market sentiment likely also play pivotal roles in shaping Bitcoin's market development, one might wonder how this cyclical nature of Bitcoin’s market behavior will continue to evolve over the next years and decades. It is also noteworthy that, in this current cycle, the dynamics of the Bitcoin market cycle might have been influenced by the new spot ETFs, which launched in January 2024. For example, one interesting fact is, that Bitcoin has already reached a new all-time high before the halving this year, something that has never happened in the cycles before.

From today’s perspective, looking back at the past cycles of Bitcoin’s market development, there are a few key dates to keep in mind. Firstly, the fourth halving is projected to take place on 20 April 2024. Secondly, the last macro cycle price top for Bitcoin was on 10 November 2021 and the following and currently last macro cycle bottom was on 21 November 2022.

Now let us wrap up the average historical durations between these pivotal events in the Bitcoin market cycle. Historically, the average time between the Bitcoin halvings is 1388 days, which is three years and nine months. The average historical duration between a halving and the next market cycle top is 480 days, which is one year and four months. The average historical duration from a market cycle top and the next market cycle bottom is 383 days, which is one year and two weeks and the historical average duration between a market cycle bottom and the next halving is 523 days or one year and five months.

We know that a Bitcoin halving takes place every 210’000 blocks, which has historically lined up with the calculated average duration above – this would put the occurrence of the fifth halving to the beginning of the year 2028 and while past performance is never a guarantee for future results, it will be interesting to observe how this thought-experiment will compare to the actual development of the Bitcoin market cycles in the coming years.