Current Trend? Webster's Rating Analysis Results: There is a fixed pattern in the trend before the halving.

With just 4 months left until the Bitcoin production halving, renowned cryptocurrency rating agency Weiss Ratings has reviewed the bull and bear market transition cycles before and after the Bitcoin halvings in 2012 and 2016. They believe that the volatility and consolidation before the halving are normal phenomena, and the true bull market will only begin after the halving.

In traditional financial markets, predicting major events that may affect supply and demand dynamics is difficult, but for Bitcoin, it is quite the opposite.

Block Reward Halving

The block reward halving is scheduled to take place in May this year, reducing the new Bitcoin supply by 50%. The block reward halving occurs approximately every 4 years, and when the total circulation of Bitcoin reaches 21 million, the block reward will decrease to zero.

Bitcoin generated by blocks is a measure to reward miners for verifying new transactions and recording them on the blockchain. The initial block reward for Bitcoin was 50 BTC. It has since undergone two halvings:

• November 2012, reduced to 25 BTC.
• July 2016, reduced to 12.50 BTC.
• May 2020, reduced to 6.25 BTC.

Weiss Ratings pointed out a key aspect, noting that in the past two historical cases, the block reward halving coincided with Bitcoin's recovery from the previous bear market:

• November 2012 halving: The bear market low point was in November 2011, with the halving occurring 12 months later.
• July 2016 halving: The bear market lows were in January and August 2015, with the halving occurring 19 and 11 months later, respectively.
• May 2020 halving: The bear market low point was in December 2018, with the halving occurring 18 months later.

Weiss Ratings noted:

After experiencing a bear market and an initial surge, Bitcoin prices often consolidate for months before the block reward halving, followed by the arrival of a true bull market.

2012 Block Reward Halving

Weiss Ratings detailed the price changes of Bitcoin in the 12 months leading up to the 2012 block reward halving:

• In the first 4 months of the 12-month period before the halving, Bitcoin rebounded from the bear market low point, with an average daily increase of 1.29%. (Arrow 1)
• The following 8 months were a consolidation period, with an average daily increase of only 0.62%. (Sideways range)

After the block reward halving, Bitcoin soared by an average of 23% daily until reaching the peak of the bull market.

2016 Block Reward Halving

In the 12 months leading up to the 2016 block reward halving, the trend mirrored that of 2012:

• In the first 4 months of the 12-month period before the halving, Bitcoin rebounded from the bear market low point, with an average daily increase of 0.84%. (Arrow 1)
• The following 8 months saw a return to sideways trading, with an average daily increase of only 0.39%. (Sideways range)

Similarly, after the halving, Bitcoin entered a true bull market, with an average daily increase of 5.41%. The only difference was that this time, post-halving, there was a significant drop almost touching the previous consolidation range.

What About 2020?

Will this pattern repeat in the 2020 halving and beyond? Weiss Ratings pointed out that the patterns of past block reward halvings are quite clear, but caution is still needed before making investments.

Although the trends are generally similar, the turbulent price movements of Bitcoin post the 2016 halving, with an almost 40% drop, may not be bearable for all investors.

Furthermore, Bitcoin is still relatively young compared to traditional fiat currencies, with 31 more halvings to go in the future, which is not even one-tenth of the entire roadmap. Successfully operating for a decade does not guarantee that Bitcoin will complete its issuance plan.

Of course, no one can accurately predict that there will be no cases of cryptocurrency becoming obsolete in the next 120 years.

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