As Bitcoin (BTC) trades just a hair below the $8,000 mark at press time, down from around $10,000 since September 24, cryptocurrency traders are deliberating whether BTC will slump further to the $7,000 range.
Widely-followed crypto analyst Plan₿ points out that traders are closing in on six months before the next Bitcoin halving, an event that will reduce the BTC mining reward by 50%, effectively creating less Bitcoin for each new block.
Plan₿’s stock-to-flow model for charting Bitcoin’s price movements indicates that six months prior to Bitcoin’s halving triggers bullish sentiment. Following the 2012 and 2016 halvings, for example, BTC/USD jumped 140% and 86% respectively.
We are at about 6 months before May 2020 #bitcoin halving.
In 2012 btc jumped from $5 to $12 (2.3x) in those 6 months before the halving. In 2016 btc jumped from $350 to $650 (1.7x). pic.twitter.com/DKSQBOO2TD
— Plan₿ (@100trillionUSD) October 16, 2019
Right now it takes around 10 minutes to produce or mine a new block of transactions on the Bitcoin network. There are 17,995,362 BTC in circulation and the current block reward is 12.5 BTC.
The next halving will cut the block reward in half to 6.25 BTC, slowing down the new supply and increasing the amount of time it will take for Bitcoin to reach its maximum of 21 million BTC. Since the demand for Bitcoin has risen over time, the restriction on the new supply tends to spark dramatic price surges.
Crypto trader and analyst Rekt Capital notes that the first halving, which took place in late November 2012, was a key catalyst that led to a significant increase in Bitcoin’s price, initiating a bull cycle. In a span of 513 days,