Bitcoin: Should you expect an ’18-month’ post-halving rally this year?

• Massive retracement before the BTC halving event is “not unusual.”
• An extended rally always ensues the halving event, lasting 6-18 months.

Bitcoin [BTC] rebounded following a dovish US Fed rate decision, posted a 9.5% gain, and reclaimed $68K on 20th March

This was after dropping  over 14% from a high of $73K. However, the recovery was not sustainable as BTC faltered to $66K as of press time. 

The whip-sawing prices have attracted expert analysts’ comments citing historical data to gauge post-BTC halving price projections. 

Speaking to Yahoo Finance in an interview dated 21st March, Mark Palmer, senior research analyst of digital assets and managing director of Benchmark, said the current price action was “not unusual.” 

He added,

“What we saw in two previous halving, which occurred in 2016 and 2020, there were a significant retracement of price ahead of that event. In 2016, it was close to 40%. In 2020, it was around 20%, which is essentially what we’ve seen in the 2024 cycle.”

Palmer cited uncertainty around the halving event as a driver of the retracement. He noted that most miners leave the market during this period. 

Bitcoin price prospect post-halving

On the post-halving, Palmer noted that;

“In 2016, we saw the volatility ahead of the halving, then the price of Bitcoin went up 17X. In 2020, it was 6X.”

As such, he noted that Bitcoin always sees an extended rally after the halving that goes on for about  “18 months.”

A recent Coinbase Institutional note shared a similar observation with clients regarding the halving event. 

“Price action around prior halvings supports this view: Bitcoin gained an average of 61% in the six months leading up to prior halvings, and rose an average of 348% in the six months after halving.”

However, Coinbase noted that not all halvings are “created equal” upon looking deeper into the historical data.

The 2024 halving cycle is unique in two aspects: an uptick in institutional demand boosted by the spot BTC ETFs and possible favorable macro factors, especially if the Fed initiates interest rate cuts. 

These are bullish catalysts for post-halving BTC price scenarios in the 2024 cycle. However, whether the current cycle will follow historical data remains to be seen.