Bitcoin Halving is a scheduled event in the protocol. Basically the amount of Bitcoins that are issued as payment to miners every 10 minutes is halved.
Bitcoin Halving Indicators
Halving occurs every 210,000 mined blocks, or approximately every 4 years. Bitcoin’s next Halving means the issue will go from 1,800 to 900 Bitcoins per day.
Due to its importance and direct impact on supply, analysts pay close attention to see how it will affect the price of BTC. Therefore, we share 5 indicators that can help you interpret the price of Bitcoin in Halving.
Moving averages are tools or indicators widely used by traders.
In a very simple and graphic way, it allows us to know how the price of an asset is compared to the average of “n” periods chosen.
The simple moving average or moving average is basically an arithmetic average of observed periods.
If we establish an observed period of 1,458 days (4 years), we are establishing an analysis period equivalent to each Halving.
Historically, this indicator of Bitcoin SMA 1458d Halving has proven to be a very good support for the price of BTC.
Practically the price of Bitcoin has remained above this value. On the occasions when it has been below this indicator, it has risen immediately.
The last time the Bitcoin price reached below the SMA 1458d was on March 12. It was an excellent opportunity.
2-Year MA Multiplier
2-Year MA Multiplier, is a very graphic indicator, because it allows identifying the areas of interest at a glance for the price of Bitcoin.
The indicator is constructed using a 2-year moving average (MA) line, and also a parallel line, obtained by multiplying the 2-year MA by x5.
Since Bitcoin’s Halving occurs in 4-year periods (multiple of 2), this indicator becomes relevant.
According to the 2-Year MA Multiplier, the best buying periods occur when Bitcoin’s price falls below the 2-year moving average (green line).
Again, the last time this happened was with the recent market crash in March. If we think long term, we see that the current price has just moved away from this area.
For those who wish to sell, the areas of interest are located when the price of Bitcoin exceeds the line amplified by x5 (red line). The last time this happened was in December 2017.
Prior to Bitcoin’s next Halving, this indicator is slightly below the current price of $ 8,700.
Like the previous indicators, Mayer’s Multiple relies on the calculation of a moving average.
In this case, Mayer’s Multiple uses a moving average of 200 one-day periods (200-MA). Basically, Mayer’s multiple is obtained by dividing Bitcoin’s current price and dividing it by its 200 daily moving average.
Thus, if the value obtained by Mayer’s Multiple is less than 1, then it indicates that we are below 200-MA. If we get a value greater than 1, then we are above 200-MA.
In simple terms, we are in a bullish phase when its value is greater than 1 and in a bearish phase when it is less than 1.
At time of writing, the multiple equals 1.09, with a Bitcoin price of $ 8,794 and a 200-MA of $ 8,038. So your signal of this indicator prior to Bitcoin’s Halving is bullish.
The Multiple of Puell
This indicator directly takes the effect produced by Bitcoin’s Halving, as it analyzes the supply side of the cryptocurrency economy.
Explore market cycles from a mining revenue perspective, which depends on the rewards of each block.
Since miners are the main Bitcoin ‘sellers’ to pay all of their operating costs on Fiat, their generated revenue may influence Bitcoin’s price over time.
Puell’s Multiple is easily obtained. It is calculated by dividing the daily issue value of bitcoins (in USD) by the 365-day moving average of the daily issue value.
Historically, when the Puell Multiple has entered the area in green, these have been adequate times to enter the market. On the contrary, when Puell’s Multiple has entered the red zone it has been the best moment to take profits.
In these moments prior to Bitcoin’s Halving, this indicator returns a value of 0.9992.
Stock To Flow (S2F)
Stock-to-flow is an indicator that considers the scarcity of an asset. It is based on models typically used to value precious metals.
We define Bitcoin stock to flow as a relationship between production and the stock that currently exists.
That is, it is the number we obtain when we divide the total existence (stock) by the annual production (flow). And it is here in the part of the production where the Halving takes importance.
This is because Bitcoin’s Halving represents halving the “production” of coins for a period of 4 years. Thus, the S2F indicator is affected by the abrupt change in supply.
That makes the Bitcoin Stock to flow ratio higher, due to a shortage of flow, so in theory the price should go up.
In this 2020 Bitcoin Halving, this indicator will go from 27 to 52. What it means is that we will now need 52 years of current Bitcoin production to produce the current stock instead of 27. It will be increasingly difficult.
The S2F model is for long-term investors. According to a recent comment from its creator PlanB, it was necessary to make an improvement to the model, which predicts a fairly encouraging Bitcoin price for the coming years.
“The new model estimates a next phase / BTC group market value of $ 5.5B. This translates to a BTC price of $ 288K, between 2020-2024. “
All data and content in this article are for information only. It does not correspond to a technical analysis or investment advice. Any decision you make to invest is at your own risk.