The cryptocurrency market has been experiencing a phase of anticipation and excitement as the next Bitcoin halving approaches. Scheduled to take place in mid-2024, this event has captured the imagination of investors, who are eagerly waiting to see its impact on the market. However, historical data suggests that a mature bull market may not begin until next year at the earliest.
According to the latest data, the Bitcoin halving is already 85% complete. Additionally, the supply held by long-term holders (LTHs) is close to its all-time high (ATH). In previous cycles, this indicator has signaled the proximity of a macro bottom and the early phase of a new cycle.
The supply held by LTHs has historically been a good measure of the health of the cryptocurrency market. During market bottoms, long-term hodlers tend to keep their assets unmoved, while the largest increase in supply held by LTHs occurs during violent bear markets. These investors have strong hands and believe in the future potential of the cryptocurrency market, hence they hold on to their coins even when prices are plummeting.
In contrast, during a bull market, the surge in BTC price prompts LTHs to become more willing to sell their assets at a profit. This results in a dramatic drop in supply held by LTHs, as the coins move into the hands of short-term holders (STHs) who join the market driven by the desire to make quick profits.
Cryptocurrency analyst @therationalroot published a chart showing the supply held by long-term holders of Bitcoin. The chart reveals that currently, the BTC supply ratio in the hands of LTHs is close to its ATH of 76%, which was reached at the end of 2015 before the second halving. Each time the indicator reached the peak of a given cycle several months before the Bitcoin halving, followed by a gradual decline and sideways movement until several months after the next halving. It was around 6 months after the halving that a strong decline in this metric occurred, signaling the start of a mature bull market.
@therationalroot also published another chart showing the progress of the current Bitcoin halving. It indicates that the halving is already 85% complete, and the previous two cycles experienced similar periods of sideways price action during the final 15% of the halving process. However, in the previous cycle, the COVID-19 crash provided an extra opportunity for investors to take advantage of an attractive position before the planned halving.
Based on historical trends, it is possible that the cryptocurrency market could enter a roughly one-year sideways trend after the Bitcoin halving in mid-2024. The effects of the halving may only become apparent in the last quarter of 2024 and throughout 2025.
This prediction aligns with the trends observed in the chart of supply held by long-term holders. The indicator is currently approaching its ATH and will likely take about 12 months to reverse its trend and enter a distribution phase. When LTHs start selling after the halving, it will be one of the first signals of the beginning of a cryptocurrency bull run.
It is important to note that this analysis is for informational purposes only and should not be considered financial or investment advice. Market conditions are subject to change, and it is always advisable to conduct your own research and consult with a professional before making any financial decisions.