Halving BTC and the financial market cycles of blockchain technology

In this article we will analyze in general the effect of BTC halving on cyclesfinancial market of blockchain technology. It is essential that you know this information before you invest in this market.

What is BTC halving?

In very simple terms, a BTC halving occurs when the creation rate of new BTCdecreases to half, i.e. the amount of BTC emitted is divided by 2, which causes them to start creating less BTC than before and this reduces the supply of new currencies. This event occurs approximately every 4 years and is pre-established in its source code. It is a decentralized event that does not depend on any government or company. It should be noted that BTC is limited, there will only be 21,000 of them, currently in circulation there are approximately 19,300,000.

More technically, halving is an automated reduction process for half of BTC that receive miners as a reward for creating a block in BTC blockchain. The new currencies in circulation are the reward to miners for bringing great computational power to verify and validate the transactions of this network in a decentralized way. The halving BTC happens every 210,000 mined blocks (if you create a block approximately every 10 minutes, so 210,000 blocks are about 4 years).

To understand this it is important to understand that, instead of having a centralized database, blockchain technology uses a decentralized network of us (mines) to store and verify information. Each block of data in the chain is encryptedly connected to the previous block, creating a chain of blocks connected to each other (blockchain = block string) that contains checks and transactions that are validated between the different nodes (mineros) distributed worldwide. In the following images, it is understood:

It's a disruptive technology linked to emission and transfer of value among internet users, which works from person to person without a centralized entity as intermediary. For further illustration, view the following image:

If you want to delve into how BTC mining works visits the following pages: https://academy.bit2me.com/mineria-bitcoin-like-crea-un-lock/ and https://academy.bit2me.com/que-es-un-nodo.

How many halvings were there?

So far, sThere were 3 halvings from BTC:

The picture reflects that, nowadays, approximately every 10 minutes, are created - emit 6,25 new BTC, these can be sold or crushed by the miners who earn them. From the year 2024, in the fourth halving, this creation - emission will instantly decrease to 3,125 BTC.

In total there will be 33 halvings of BTC, the latter will occur approximately in the year 2140. In the following image, the first halving is represented with the nro. 2:

It should be noted that, after the last halving will already be issued all 21,000 BTC and the only gain that miners will have will be the commissions for validating the transactions carried out in their blockchain.

Thus, all mentioned causes BTC to be an asset deflationary. More specifically, in large strokes, There are three main factors that provoke this1) The limit set out in the total number of BTC to be put in circulation (21.000.000). 2) The reduction for half the creation rate of new BTC (provoked by your halving). (3) The systematic appropriation of BTC, both institutional and private, produced by its adoption and international acceptance (provocing that it is less in circulation, because they do not move from the wallets where they are stored).

In addition, it must be noted that this deflationary BTC process is totally against the monetary system carried out by the Central Banks of the largest economic powers, which depend on the permanent printing of new money to stimulate their economies, besides not having a limit on the amount they can issue. Every 4 years there is more new fiduciary money in circulation, but less amount of new BTC - reduces supply by halving - while its demand increases by the unique qualities it possesses.

In this article, I only developed some of these qualities, then I will continue to explain others more.

How did they influence the halvings at the BTC price?

Remember that halvings caused a reduction in the supply of new BTC. Let's note that it went through its price after each halving:

First Halving

The first halving It was on 28 November 2012 and the price of BTC was 12 USD. 13 months after the event, for December 4, 2013, its price was 1.235 USD:

Second Halving

The second halving It was on 9 July 2016 and the price of BTC was 640 USD. 17 months after the event, for December 16, 2017, its price was 19.290 USD:

Third Halving

The third halving It was on 11 May 2020 and the price of BTC was 8,619 USD. 18 months after the event, for November 8, 2021, its price was 67,500 USD:

In the period between the accumulated dates there were other fluctuations of its price, here I only take as reference the illustrated days in the graphics. BTC has progressively climbed from a little since its halvings.

As they can alert, so far, after each halving the price of the BTC was revalued, but as the new halvings happened increased by a lower percentage. The first halving was what caused the highest rise in its price and the last to lowest (speaking in percentages).

Market cycles.

First of all, it is clear that, the financial market of blockchain technology is much more than BTC, it all started with it, but it is a blockchain First Generation, Currently this technology has evolved and exist new assets (tokens, NFTs, among others), as well as new blockchains cryptocurrencies Second and Third Generation, where the so-called Smart Contracts (smart contracts).

Clarified this, it should be noted that halving BTC did not only produce a price increase in this cryptocurrency, but also affected the new alucidated assets. For example, I invite you to see the ETH chart (Ethereum) on the same dates mentioned above in the charts (only the dates of the second and third halving, in the first still did not exist).

This happened, because the re-evaluation of BTC produced that the financial market of blockchain technology is more attractive to private and institutional investors and provoked that the most capital entry in the market, distributing in those assets that attracted more attention depending on their characteristics. This does not mean that all assets have risen, the opposite, when more unexpert users have emerged many frauds and thefts. So you have to know what, how and why invest, performing the pertinent intelligence tasks.

To these large rises and market corrections, very great traits, it is divided into 2 cycles: “Bull Market” (Alcista Market) and “Bear Market” ( Bajista Market). After each halving happened an Alcist Market that lasted a total of approximately 13-18 months and after that a Bajist Market, until the next Alcista Market after the new halving.

For example: BTC climbed from the day of his second halving in 2016 from 640 USD to 19.290 USD in 2017 (Alcista Market), then during the years 2018, 2019 and principles of 2020 did not return to the previous maximums ( Bajist Market), but after his third halving in May 2020 rose from 8.619 USDUp to 67,500 USD in 2021 (new Alcista Market). Today we are in a newBajist market where we should not see the price of BTC at historical maximums (2022, 2023 and principles of 2024).

This It does not mean that it is only worth investing in this market after each halving. In bassist contexts also arise opportunities, for example, BTC in 2019 rose from 3,400 USD to 13,000 USD, to this is called Alcista Rally in the Market Bajista, as is currently happening what happened from 15,400 USD to 28,000 USD.

In addition, there are always assets that have one independent demand in the market context and more today by the large daily trade volume that is in USD (it recently passed with the tokens linked to Artificial Intelligence and with those who carried out Airdrops). Similarly, it depends on what circumstances You bought the asset, whether marketed or in your public or private pre-sale (ICO, IEO or IDO), among other factors. However, BTC's halving has so far proved to be extremely important To see the prices of the assets of this financial market at new historical ceilings.

In this way, an Alcist Market causes the price of many financial assets in blockchain to be overvalued and a Bajist market tends to cause these assets to be undervalued. The latter can be a good time to accumulate deprecied high-quality assets, with these investments being medium term (1 - 3 years between purchase and use - depending on what is -, for later sellingin the Alcista Rally of the Bajist Market or in the next Alcista Market re-evaluation) and, the first, can give a good context, with excess trade volume in USD, to make investments short-term (days, weeks, months or 1 year) more securely, if duly investigated and managed the risks.I declare that this is in very general terms, there are many different types of investments depending on the context in which we find ourselves.

On the other hand, the Bajist markets tend toDrag With all the companies in the sector who have not managed their funds well, they have not carried out due diligence to survive and, if the companies do not manage their funds.survivors In this context, they are the ones that have the highest growth perspective that can come to the medium-term and more in an upward trend. The market is clean and are the highest quality companies with their undervalued assets, how is happening in the current Bajist Market. Obviously, the offer is huge, so we need to analyze in depth what to invest and diversify.

In addition, outside the particularities of this market, it is also necessary to consider external situations which affect the price of these positive and negative assets. For example: The current international economic crisis, the rise or fall of the EDF interest rate in the US, a quantitative flexibilization carried out by Central Banks, the regulation of this new financial sector, among others.

When's BTC's next halving?

The room halving BTC sIt was about in the month of April of the year 2024.

If you want to see live how many blocks and days are missing for the next halving, visit the following page: https://academy. binance.com/es/halving.

Completion.

First, it should be noted that, the Previous returns do not guarantee future returns, but if they are a good indicator to determine a percentage of probability of repetition.

In this way, considering how the price of BTC was reacted after each halving, added to the great current fundamentals surrounding it and its great institutional and international adoption of the last few years, perhaps the story is repeated in the fourth halving of 2024. We do not know exactly, but we must be prepared and have the proper knowledge if a new upward trend is alerted to new historical maxims (overvalued). In addition, there must be external situations that can be presented.

Similarly, I note that each reader should decide whether or not it is worth investing in Bitcoin or other short, medium or long term asset if it considers them undervalued. The present is not an investment recommendation, each must carry out their own investigations and above their own conclusions. A single indicator was only taken into account here, but there is much more (ten) to be able to manage the risks well when entering the market. You always have to invest prudently with a buying strategy and a selling strategy.

Investments here are very volatile and at high risk, more for new users who are prone to fall into fraud or thefts and/or buy at new historical prices maximums to later sell in a great fix provoking huge losses.

The worst mistake you can make in this market is to be impatient and to be led by greed or fear.