Eternal consolidation period: It has become a historical rule that there must be a sideways movement after the halving. Will this time be different?

Source: Flossy X Account

Author: Flossy

Compiled by: Deep Tide TechFlow

Introduction

The Bitcoin market is entering an intriguing phase following the fourth halving completed in April 2024. This cycle presents unique challenges for analysis, with new factors such as ETF approvals influencing traditional post-halving patterns.

In this article, we will review historical data from past halvings, assess the current market conditions, and explore one of my ideas—a potential long-term consolidation period that may define this cycle. While I am not claiming this idea is entirely novel, it is interesting that I have seen little discussion about this perspective recently. When I mention this idea, the common response is, "This cycle is different."

Bitcoin Halving: History Doesn't Repeat Itself Exactly, But There Are Always Similarities

First, let's discuss the main character of this idea: Bitcoin halving. We just completed the fourth halving on April 19, 2024. Here’s a recap of past halvings and what happened afterward:

• November 28, 2012: Reward reduced to 25 Bitcoins

• July 9, 2016: Reduced to 12.5 Bitcoins

• May 11, 2020: Cut to 6.25 Bitcoins

• April 19, 2024: Now reduced to 3.125 Bitcoins

Now, things get even more interesting. Let’s take a look at the price movements during previous halvings:

First Halving - November 28, 2012

• Price at halving: Approximately $12

• Consolidation period: About 1 year

• Price at end of consolidation: Approximately $100

• Subsequent bull market peak: Approximately $1,100 (November 2013)

• Percentage increase from halving to peak: Approximately 9,000%

Second Halving - July 9, 2016

• Price at halving: Approximately $650

• Consolidation period: About 0.5 - 1.5 years (depending on how you view the bull market)

• Price at end of consolidation: Approximately $1,000

• Subsequent bull market peak: Approximately $19,700 (December 2017)

• Percentage increase from halving to peak: Approximately 2,930%

Third Halving - May 11, 2020

• Price at halving: Approximately $8,600

• Consolidation period: About 6 months

• Price at end of consolidation: Approximately $10,000

• Subsequent bull market peak: Approximately $69,000 (November 2021)

• Percentage increase from halving to peak: Approximately 702%

Current Halving - April 19, 2024

• Price at halving: Approximately $64,000

• Consolidation period: 5 months so far

The Great Consolidation Theory: We Are in It

This is where my theory comes into play. Because this is exactly what we are seeing now: a consolidating price trend, which is psychologically challenging for many investors.

Looking at these numbers, the pattern seems quite clear:

1. Initial rise: We typically see a price increase before the halving.

2. Great consolidation: After the halving, we enter a consolidation period of about 6 months.

3. Breakout: Following the consolidation, the real bull market begins, leading to new all-time highs.

Image: Is this the state we are in?

This Halving Cycle: Similar Yet Different

Now, you might ask, "Wait, we reached an all-time high before this halving!" You are correct. The ETF approval in January 2024 changed the typical post-halving market dynamics, leading to a price increase ahead of time.

ETF Effect: New Market Dynamics

The approval and launch of Bitcoin and Ethereum spot ETFs have brought new dynamics to the crypto market. Let’s analyze:

1. Bitcoin ETF Approval (January 2024): This led to a significant increase in price and trading volume. We saw Bitcoin reach a new all-time high before the halving, which is different from past cycles.

2. Ethereum ETF Approval (May 2024): Following Bitcoin, the Ethereum ETF was also approved and launched. This brought new institutional investor interest and arguably more capital flowing into the crypto space.

While these developments have brought new liquidity and attention to the market, they do not necessarily negate the potential cyclical patterns. The "consolidation market" may still be at play, but it operates under new scales and variables.

Data-Supported Consolidation: This Is Not Just a Theory

Image: Previous halving timeframes and ranges

Even in the price increase before this halving, we still see signs of a consolidating market:

1. Decreased volatility: Despite higher prices, Bitcoin's volatility has been decreasing since the halving.

2. Trading range: Since the halving, we have been trading within a relatively narrow range, with classic consolidation behavior showing about 25% bidirectional volatility.

3. Decreased trading volume: Overall trading volume has been declining, which is also a hallmark of a consolidating market.

Origins of the Theory

It is worth noting that this is not a theory I came up with randomly. I have been sharing elements of this perspective on my Telegram channel for some time. As early as April 9, just before the halving, I began discussing it. These early posts touched on the core ideas behind the theory—recognizing the importance of post-halving market patterns, the risks of overthinking short-term fluctuations, and the value of focusing on accumulation during these periods.

Institutional Consolidation: New Players in the Game

Now, this cycle has become even more interesting. We have a new player: institutional investors entering the market through ETFs. These are not typical "buy high, sell low" retail investors. Their actions are slow and steady, accumulating during the consolidation.

ETF data shows that even during price stagnation, capital inflows remain steady. This is institutional consolidation at work, changing the rules of the game.

What This Means for the Current Cycle

Image: Historical monthly price movements (Bitcoin)

Based on historical data and current market conditions, we might expect the following:

1. Accumulation phase: Smart money (through institutional ETFs, large holders, and savvy retail investors) is likely to continue accumulating during this phase.

2. Potential breakout timeframe: If historical patterns hold (which is often the case in the crypto market), we might see the real bull market kick off in Q4 2024 or Q1 2025.

3. Short-term historical patterns: Historical data strongly supports the view that we are at a critical moment. Take a look at Bitcoin's monthly returns over the past decade:

The performance in September and October almost perfectly aligns with the typical transition from "consolidation/bear market" to "bull market" after the halving. If this pattern holds this year, we might see the current consolidation phase end in September, followed by a significant rise in October.

• September's average return is -4.78%, with a median of -5.58%, making it one of the worst-performing months historically.

• In contrast, October's average return is 22.90%, with a median of 27.70%, consistently one of the best-performing months.

Consistency of the Pattern: Particularly noteworthy is the consistency of this pattern. In the data shown, October has had positive performance in 9 out of 12 years, with some years seeing remarkable gains (such as 60.79% in 2013 and 39.93% in 2021). This consistency adds credibility to the view that we are on the verge of a potential market shift.

Conclusion: Patience Remains Key

Previous Halvings

Data does not lie. Each halving cycle has its consolidation phase, and there is no reason to believe this one will be different. Yes, ETFs have added new factors, but the fundamental market dynamics remain the same.

So, what should smart crypto participants like you do? It’s simple:

1. Accumulate: Use this consolidating market to build your positions (but never invest more than you can afford to lose).

2. Stay patient: Remember, the biggest gains come to those who can wait patiently.

Patience is not just a virtue in the crypto market—it is a powerful weapon. While others may feel frustrated by the consolidating price action, you will be accumulating, knowing that the real movement has yet to come.

However, I am just an ordinary internet user. This is not financial advice. Always do your own research and manage your risks.