Analysis of Bitcoin Halving Cycle and Market Laws

1. Halving Mechanism

• The issuance of Bitcoin is halved every four years, which is the core design of its protocol to ensure supply scarcity.

• The current output is 6.25 BTC per block, and the next halving is expected to be around April 2024, which will be reduced to 3.125 BTC.

2. Bull market effect after halving

• Time node: Historical data shows that the market usually ushered in a bull market outbreak within about 6 months after halving.

• For example, the halving events in 2012, 2016 and 2020 all triggered a rapid rise in prices.

• Reason: Halving directly reduces the amount of new supply, while demand continues to grow, and the imbalance between supply and demand drives prices up.

3. End time of bull market and escape strategy

• Bull market cycle: Usually about 1.5 years after halving, the bull market reaches its peak and then enters a plunge phase.

• For example, the bull market peaks in 2013, 2017, and 2021 all occurred about 18 months after the halving.

• The best time to escape the top: before the plunge, prices are usually in an extremely optimistic "bubble zone".

• Characteristics include a surge in trading volume, an influx of retail investors, a large number of reports from the mainstream media, and extremely excited market sentiment.

Summary and investment advice

• Layout strategy: accumulate chips before the halving, and the 6-18 months after the halving is the bull market bonus period.

• Beware of risks: Although the bull market brought about by the halving is considerable, the risk of bubbles in the late stage is extremely high, and it is necessary to pay attention to locking in profits in time.

• Long-term logic: Bitcoin's scarcity and market laws make it an asset worthy of long-term attention, but it still needs to be flexible in dealing with cyclical fluctuations.