Argentina's first case: BTC and USDC as legal innovation and global practice of company registered capital

Do not be superstitious about cycle theory, it can only serve as a reference for your investment decisions.

Author: Zero Ika

Compiled by: Luffy, Foresight News

BTCHalving is a topic followed by many in the encryption world. Historically, it has often been a catalyst for a new round of Bull Market. This tweet is about my analysis of the BTC cycle.

What is BTCHalving?

BTCHalving is a plan designed to reduce the Block Reward obtained by Miners. When BTC was launched in 2019, Miners could receive a reward of 50 BTC per Block. After approximately four years, this reward would be reduced by half.

• 2012 Halving: Each Block rewards 25 BTC
• 2016 Halving: 12.5 BTC reward per Block
• 2020 Halving: 6.25 BTC reward per Block
• 2024 Halving: Each Block 3.12 BTC Reward

The purpose of Halving

Since BTC was created in 2009 (after the global economic crisis in 2008), its goal is to be an alternative to fiat currency that is not affected by Inflation. Therefore, Halving is crucial for creating a Deflationary currency protocol.

Some Misunderstandings

It is widely believed that BTC experiences a Bull Market every 4 years and a Halving event every 4 years.

This is not entirely accurate. The specific time is not exactly 4 years, but depends on the block time, with Halving occurring every 210,000 Blocks.

Law of Supply and Demand

Historically, a Bull Market always follows BTCHalving by a few months. This is due to the supply and demand relationship, the scarcer the asset, the greater its value as demand increases.

Therefore, the relationship between price and Halving is determined by demand, which does not necessarily mean the price will pump. Due to Block Reward Halving, even if the number of buyers remains the same, it will help increase the price. This is how the law of supply and demand works.

Prediction

Everyone is trying to ‘predict’ the cycle, eager to catch the top and bottom of BTC to increase the return of the investment portfolio.

But ‘prediction’ is often the most difficult, because many things can disrupt our theoretical basis:

• Black Swan (Covid, war, etc.)
• Unexpected events (FTX + LUNA crash, etc.)
• Swan (changes in monetary policy, etc.)

So, having an open mindset is important.

Regardless, cycles are the “compass” that provides us with better navigation. If we compare the price history of Bitcoin (BTC) with the 200-year history of TradFi, it is relatively new, but it is also the analytical data we need.

4-Year Cycle

There are many indicators applied to the BTC chart, but what fascinates me the most is the 4-year cycle, from which we can find some interesting correlations.

2014 -2017

• From the high point in 2014 to the high point in 2017: approximately 211 weekly bars, 1477 days.
• From the bottom in late 2015 to the bottom in late 2018: about 205 weekly bars and 1435 days.

2017-2021

• From the high point in 2017 to the high point in 2021: approximately 204 weekly bars, 1428 days.
• From the bottom in late 2018 to the bottom in late 2022: approximately 205 weekly candles, 1435 days.

As you can see:

There are about 200 bars from one high point to the next high point or from one bottom to the next bottom on the weekly chart. This is an interesting correlation that indicates the cyclical nature of prices.

What about 2021-2025?

The most concerned question for everyone is:

• In 2025, will BTC reach a high point?
• Will there be a bottom in 2026?

Remember, this is just one aspect to consider in your overall plan, and the best approach is always to evaluate step by step.

But it’s charming, isn’t it?

Circulation Ratio

Another factor that needs to be considered is undoubtedly the impact that the Halving will have.

During the first Halving, BTCCirculating Supply was approximately 10.5 million, and now, Circulating Supply has exceeded 19 million.

Therefore, the impact of the next Halving may be reduced, as 90% of the total supply of BTC has already been circulated.

Decreasing Returns

With the popularization of public awareness and the rise of incoming market funds, the return rate we can obtain will gradually drop. This may be a natural evolution of new financial assets and industries:

• More standardized

• Stronger Liquidity

• More adoption

If the encryption market reaches the size of the securities market one day, what will happen? We can speculate that the volatility will decrease.

If we compare the periodical return rate, we will find:

• From Halving in 2012 to peak in 2014: 11,000%

• From Halving in 2016 to the peak in 2017: 3685%

• From 2020 Halving to the peak in 2022: 685%

As you can see, the rate of return has a noticeable downward trend, but it is still very considerable.

Summary

As mentioned earlier, when we decide when to buy/sell, we cannot rely solely on cycles. Past performance does not guarantee future performance. However, they can assist us in making decisions, as one aspect of the factors we consider.

This industry is still very small and easily influenced by speculative behavior. When most people believe in something, the impact of this behavior is often magnified. However, BTCHalving is not just talk, it is a technical feature explicitly stated in the protocol, which is something that always needs to be remembered.