The fourth Bitcoin halving is approaching: is it time to go long? | chart watcher

Bitcoin is scheduled to experience its fourth halving on April 19th. It is well known to cryptocurrency enthusiasts that this halving occurs every four years and is a significant event that can significantly change the market dynamics of Bitcoin as it affects the supply mechanism of the coin.

How did the Bitcoin halving affect the price?

With each price halving, the following important developments have been made:

• After the first halving in 2012, the price of Bitcoin rose from $12 to $900.
• The second halving in 2016 saw prices rise from about $600 to $2,500 per year.
• The third halving in 2020 saw prices skyrocket from about $8,000 to $40,000 in less than a year.

Chart 1. Bitcoin monthly chart. Here you can see the price movements following the second and third halvings. How much will prices rise after the fourth halving?Chart source: StockCharts.com. For educational purposes.

Still, the correlation is ~ no These half-lives may simply be benchmarks that mark spikes caused by a variety of other factors.

But what if supply plays a role in the price surge following Bitcoin’s halving? What happens if demand increases to FOMO levels due to reduced supply? Is now a good time to jump in, or how can I time my entry?

Strange Concept: Bitcoin Seasonality

Some crypto analysts would argue that Bitcoin is seasonal. However, although we have seasonal data, seasonality is a completely different issue as seasonality refers to internal supply/demand mechanisms that occur continuously within a year.

Still, you might want to know the situation when trying to time your entry.

Chart 2. BITCOIN’s 10-year seasonal performance. Most months, returns are strong and closes are higher (mainly because Bitcoin continues to be subject to hype and FOMO).

Chart source: StockCharts.com. For educational purposes.

Bitcoin’s 10-year seasonal performance using StockCharts’ seasonality tool shows that October and February tend to be the strongest months, with close rates close to 90% and average returns of 24% (October) and 14.4% (February). .

However, the combination of three consecutive months – April, May and June – also presents attractive opportunities. How does Bitcoin’s 10-year seasonal performance compare to the S&P 500?

Chart 3. Bitcoin’s 10-year performance compared to S&P 500. Notice how October and February remain the most important months compared to the overall market.Chart source: StockCharts.com. For educational purposes.

As shown in the chart above, October and February are Bitcoin’s strongest months. April to July are relatively strong, while April is the strongest of the spring months.

How to access seasonality tools

There are several ways to access StockCharts’ seasonality tools.

• Click Next. charts and tools Enter your symbols in the tabs at the top of the StockCharts page. seasonal panelClick and go.
• Enter a symbol in the chart bar at the top of the page and select ‘Seasonality’ from the left drop-down menu.
• at dashboardIn Member Tools seasonality.
• Below the seasonality chart are links to instructions and quick tips that provide more detailed guidance.

So what does today’s price action look like? Let’s take a look at the daily charts of Bitcoin and US Dollar.

Chart 4. Bitcoin daily chart. Keep an eye out for waning momentum and potential support levels, which serve as possible entry points for those looking to invest for the long term.

Chart source: StockCharts.com. For educational purposes.

Pay attention to the five-day Bitcoin selloff from March 14th to 19th. Bitcoin bulls took the plunge, with the price approaching the most recent low just below $60,000, possibly in light of the April halving event. This level also coincides with the 38.2% Fibonacci retracement. It was withdrawn from a January 2024 low of $38,512 to a March high of $73,802.

However, note that like the Money Flow Index (MFI), the bounce lacks momentum. and Chaykin Money Flow (CMF) This is a sign of a sharp decline in buying pressure. However, MFI is nowhere near “oversold” territory and CMF is still above the zero line. This is an optimistic sign that buyers still have a technological advantage.

Even if the current rally falters, Bitcoin’s upward trend will likely continue. A painful decline as high as the $56,000 range would likely keep the upward trend intact. Kumo (Ichimoku Cloud) It was also designed to confirm this “level of support” thesis. Notice how the price bounced back on Kumo last January. Current price action provides a broader range of support level expectations.

conclusion

The fourth halving event on April 19th is likely to stimulate some FOMO, but watch the current swing to see if it continues or pulls back. The upcoming month is strongly seasonal, but seasonality may play second fiddle to the halving event. If it falls, we can see levels at which Bitcoin is likely to bounce, which serves as a strategic entry point for those looking to invest for the long term.

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use these ideas and strategies without first evaluating your personal and financial situation or consulting with a financial professional.