Hello everyone.
My name is Ildario.
I am trying to explore the behavior of Bitcoin (BTC) after the halving. As is known, the event is rare but inevitable. I want to state immediately that this is only an analysis, meaning it could be entirely erroneous (one could lose everything, absolutely everything).
Why it's crucial to be EXTREMELY cautious (and curb your excessive optimism and greed):
There have been three halvings, and each one showed significant growth in BTC; hence, predicting the outcome of the fourth event based on three occurrences is foolish. More precisely, while such a prediction is feasible, it is NOT a guarantee of the same outcome.
A coin can land on heads three times and could either land on heads again or tails on the fourth flip, meaning there's a 33% chance of it randomly repeating (apologies to mathematicians if I'm mistaken). You wouldn't be surprised if the coin behaves unpredictably on the fourth toss, right? The same applies here.
It's no secret that many major players can influence the market. Those with money can trigger a market crash with paid articles from journalists, or vice versa. We don't know what's on their minds (and most likely, we will never know their plans).
I've previously mentioned the example of a turkey in the USA, which gets fed and cared for 353 days a year, believing this will always be the case. This has been repeated for 353 days; statistics would lead the turkey to believe this pattern will continue, and it expects to be fed and sheltered on the 354th day. However, that day turns out to be Thanksgiving... (this is a reference to Taleb).
You might argue that everyone knows (of course) how Bitcoin's price will behave because many very intelligent people have studied this issue.
Alright, let's listen to their predictions; after all, authoritative opinions are important to us:
John McAfee - One of the boldest forecasts came from McAfee, who even promised to eat his shoe on live TV if his prediction did not come true. Initially, McAfee predicted that Bitcoin would reach $500,000 by the end of 2020, but later doubled his forecast to $1,000,000. He repeatedly affirmed his forecast during 2017-2020 but ultimately retracted these statements.
Raoul Pal - A former hedge fund manager and founder of Real Vision, Raoul Pal suggested that Bitcoin could reach $1,000,000 within the next five years (from 2020), based on his analysis of market structure and the growing institutional interest in cryptocurrency.
Jesse Lund - The former vice president of blockchain initiatives at IBM, Lund stated in 2019 that, in his opinion, Bitcoin could be worth $1,000,000 by the end of 2020, which would promote the broader adoption of cryptocurrency and its use as a store of value.
Tim Draper - A well-known venture capitalist, Draper predicts that Bitcoin will reach $250,000 by 2022. Although this is less than a million dollars, his long-term outlook suggests that Bitcoin could achieve even greater value in the future, considering his forecasts for increased demand and widespread recognition of Bitcoin as a payment method.
The list of authoritative figures could go on and on...
Wait, stop... it's already 2024, and these predictions haven't materialized... well...
What would I definitely not do after the halving?
Answer: Trade with leverage, especially using someone else’s money. This has really caused plenty of heart attacks, poverty, and various broken fates. Imagine that the forecast does not come true, and you have taken money from your mom's retirement account (I did this and I am still incredibly ashamed of it).
So, a trader believes there will be significant growth, takes on leverage in margin trading, and dreams of escaping to tropical islands with beautiful top models on his own private island. He believes that even a 5000% increase and a 1:3 leverage ratio (which would add +15000 to his deposit) is a likely scenario.
Imagine the psychological trap many fall into, because no matter how much you win, it only takes one loss to lose ABSOLUTELY everything.
Let's consider another trader named Vitalik (all names and resemblances are coincidental). He caught a bull market at the beginning of the year, using leverage three times. And so his $50,000, set aside for education, turned into $1,000,000 (he could withdraw it, but greed plays a cruel joke on him). He notes that previous halvings have only dropped Bitcoin's price by a maximum of 17.4%!
What’s so bad about him using his $1,000,000 in Bitcoin to start trading with 1:3 leverage (since a 17.4% drop isn’t scary)... over time, the BTC rate could collapse by 34% in one day (then, let's say, it might rise). What awaits our trader? Correct, bankruptcy.
Once again, such a scenario is entirely possible:
The trader got carried away because $50,000 brought him $1,000,000 (in BTC).
The trader did not convert this $1,000,000 (in BTC) into fiat money but decided to use a 1:3 leverage again, aiming to turn it into $150,000,000 (at least in his own mind).
A 34% drop BTC price occurred.
…..
Profit (not for our trader).
For instance, I myself successfully used leverage three times. I had 120 BTC, which I lost in margin trading. But a year later, I bounced back, especially remembering how my friend once bought a SAMSUNG smart TV for 35 BTC. He turned it on once to watch a show about bird migration. Alex, if you're reading this, know that I'm not mocking, just stating facts for my analysis, no hard feelings, okay?
So, what am I getting at? Why do I think there is a risk of mass liquidations?
Answer: Because even my 13-year-old niece is using ChatGPT. Many traders have also been using this AI tool for their predictions.
Here's what ChatGPT tells us:
First Bitcoin Halving (2012):
Let's focus on the first Bitcoin halving in 2012 and provide more detailed information about the days until the minimum and maximum prices after the halving, as well as calculate the percentage changes.
First Halving (November 28, 2012):
Price of 1 BTC the day before the halving: about $12.35
Minimum price after the halving: about $12.30 (1 day after the halving)
Maximum price after the halving: about $1,163 (368 days after the halving)
Percentage changes:
Percentage change to the minimum price after the halving: 0.4%
Percentage change to the maximum price after the halving: 9419.8%
Second Bitcoin Halving (2016):
Let's look at the details of the second Bitcoin halving, which occurred on July 9, 2016, and analyze the price changes before and after this event:
Second Halving (July 9, 2016):
Price of 1 BTC the day before the halving: about $650.63
Minimum price after the halving: about $537 (24 days after the halving)
Maximum price after the halving: about $19,783 (526 days after the halving)
Percentage changes:
Percentage change to the minimum price after the halving: ≈−17.4%
Percentage change to the maximum price after the halving: ≈2938.4%
Third Bitcoin Halving (2020):
Details of the third Bitcoin halving, which occurred on May 11, 2020, allow us to see the price changes before and after this key event:
Third Halving (May 11, 2020):
Price of 1 BTC the day before the halving: about $8,787
Minimum price after the halving: about $8,600 (1 day after the halving)
Maximum price after the halving: about $64,804 (337 days after the halving)
Percentage changes:
Percentage change to the minimum price after the halving: ≈−2.1%
Percentage change to the maximum price after the halving: ≈637.5%
....so....
And now for some magic, let's ask ChatGPT to predict the fourth halving:
Of course, at first it might respond with something like, "Buddy, have you lost your mind? I'm artificial intelligence, not a crystal ball." But then we'll activate our rhetoric skills and get the following answer:
ChatGPT: Based on the current price of $66,482 per 1 BTC a day before the predicted halving, let's try to apply similar calculations to make assumptions about the minimum and maximum price after the halving:
Forecast of minimum and maximum prices after the halving:
Minimum price change after the halving: Considering the average minimum drop of -6.6% (based on previous data), the minimum price after the halving could be around:
Minimum price ≈ $62,078 (9 days after the halving)
Maximum price change after the halving: Using the average maximum increase of +4332% (based on previous data), the maximum price after the halving could be around:
Maximum price ≈ $2,882,255 (410 days after the halving)
These estimates are based on historical data and do not account for many other variables that can affect market prices, such as changes in the macroeconomic environment, regulatory changes, and innovations in technology. Therefore, such forecasts should be considered with caution, as theoretical analysis and not as precise action guidance.
....
Wow! According to ChatGPT's forecast, the growth could reach ≈$2,882,255.
....
ATTENTION! ATTENTION! ATTENTION! YOU CAN LOSE ABSOLUTELY EVERYTHING IF YOU TAKE EXCESSIVE RISKS! REMEMBER THIS AND NEVER (NEVER, NEVER, NEVER) FORGET!
THIS FORECAST MAY NEVER COME TRUE, AND CRYPTOCURRENCY CAN BEHAVE UNPREDICTABLY!
Print out this text and stick it on the wall opposite your workplace!
Just remember yourself 10 years ago; I personally believed that Bitcoin could never be worth $60,000. You might not believe now that it could be worth $0. We are all prone to making mistakes.
Always think clearly, always remember that your greed can destroy your life and the lives of your loved ones.
P.S. Protect yourself from inner demons and those who want to manipulate you in order to take all your money for themselves (I'm talking about major market manipulators).
Excessive risk and boundless optimism have ruined the lives of many traders and their families...
