A cryptoasset specialist says a bitcoin rally could be forming due to anticipation for the cryptocurrency’s next ‘halving’ event, which is expected to take place next year.
Peter Habermacher, chief executive of London-based cryptoassets investment specialist Aaro Capital, says that historical data shows a crypto bull market typically commences more than a year before a bitcoin halving.
A bitcoin halving event is anticipated to happen next in April/May 2024 and results in the rate of bitcoin supply being halved.
Crypto has historically followed an approximately four-year market cycle, with “exuberant and parabolic market peaks followed by severe and painful bear markets”, writes Habermacher in an article.
Crypto market cycles have “roughly” followed Bitcoin’s halving events, meaning the market is now approaching the end of another cycle, according to Habermacher.
He says that Bitcoin’s dominance is increasing again – a sign that the major cryptocurrency is recovering from a bear market. Historically bitcoin has recovered first from bear markets, but it tends to lag other cryptocurrencies in the later stages of a bull run.
One data source that has evidenced this in the past is blockchain data, which Habermacher says provides the ability to recognise patterns and behaviours of blockchain users via their transactional data. He writes that current data is consistent with previous crypto market cycles.
“If the crypto market evolves in a similar way as previous market cycles, we can have increasing confidence that we are in the transition phase out of the 2022 bear market and into the next crypto bull market.”
Further data from technical analysis – which indicate prices that traders and investors are happy to buy at – also suggests that “greener pastures” are ahead, as there has been a clear change in the behaviour of market participants, who are “exhibiting early bull market behaviour.
In his article, Habermacher also mentions other market factors to watch, which on the negative side, include bottlenecks at service providers.
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