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Analyst predicts safer waters for Bitcoin based on historical cycle data

The "danger zone" is a term used to describe the three weeks following the halving event, which historically correlates with significant price fluctuations beneath a certain threshold.

Shashank Bhardwaj
Published: May 14, 2024 10:24:55 PM IST

Analyst predicts safer waters for Bitcoin based on historical cycle dataImage: Shutterstock

In a recent analysis based on historical cycle data, Bitcoin appears to have exited the post-halving "danger zone" and is now entering a reaccumulation phase. Following a 23% correction, crypto analyst Rekt Capital highlighted that Bitcoin may have reached a post-halving reaccumulation zone, indicating a positive shift in market sentiment.

On X (formerly Twitter), Rekt tweeted, “The Bitcoin Post-Halving "Danger Zone" is officially over.”

Bitcoin's value reached a significant milestone on May 6, peaking at $65,000 before briefly dipping to $63,712. This development has sparked optimism among analysts, who suggest that Bitcoin may have successfully navigated the volatile post-halving' danger zone,' hinting at the potential for further price increases.

The analyst drew parallels between Bitcoin price trends following the 2016 halving and recent movements, observing a notable 11% drop 21 days post-halving in 2016, which hinted at potential volatility. Similarly, in this cycle, there was a 6.5% decline about 14 days after the halving, aligning with expectations of short-term fluctuations. This analysis suggests that the so-called "Danger Zone" could soon conclude, with Bitcoin likely to start an upward trend if it stays above $60,600 by the end of this week.

After the latest halving, trading companies and financial analysts observed a stabilisation in Bitcoin price, suggesting that it has successfully navigated past the most unpredictable phase. 

In this cycle, Bitcoin's price dropped 23% from its mid-March peak, settling at $56,800 by May 1, which could signify the low point of the post-halving danger zone. The analyst noted that if $56,000 isn't the cycle's lowest mark, this downturn would match the most extended retreat in this cycle at 63 days. However, based on historical trends, the analyst believes the pullback concluded at $56,000 after 47 days. 

Further, Raoul Pal, the founder of Global Macro Investor, highlighted in a post on X on May 13th that "Macro Summer and Fall are driven by the global liquidity cycle," emphasising the significance of liquidity in shaping market trends. He introduced the concept of a "banana zone," referring to a period in the latter half of the year when high-risk assets, including cryptocurrencies, experience significant price surges.

Moreover, there's a growing optimism among traders and market analysts regarding Bitcoin's future trajectory. The general consensus is that the current stability could be a precursor to a more sustained period of growth fueled by increased institutional interest and positive market sentiment. Despite remaining risks, the outlook is increasingly bullish, with expectations of a strong upward movement if current support levels hold.

Additionally, as of today (May 14), Bitcoin is priced at $61,885, reflecting a decrease of 0.84% in the last 24 hours.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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