As the cryptocurrency market stabilizes following a turbulent period, a new analysis suggests a parabolic breakout in the price of Bitcoin (BTC) could be on the horizon, according to historical data.
Pseudonymous crypto trader Rekt Capital noted in a Sept. 23 post that Bitcoin has historically broken out from its reaccumulation range roughly 154 to 161 days after the quadrennial halving.
The fourth halving, implemented on April 20, reduced the per-block reward paid to miners from 6.25 BTC to 3.125 BTC. This marks 157 days since the event, Rekt Capital observed — meaning we are within the breakout timeframe.
“History suggests it is ‘Breakout Time’ for Bitcoin,” the pundit added.
Bitcoin mining reward halving is a preprogrammed code that takes effect every four years or after 210,000 blocks are mined on the blockchain. The event slashes the reward miners receive for validating transactions by 50%.
The main goal is to keep the Bitcoin supply in check and ensure the asset becomes scarce over time, unlike fiat currencies, which have ever-increasing supply (monetary inflation). Bitcoin has a 21 million fixed supply, and halvings help to regulate how fast that limit is hit.
The previous three halvings have always led to new historic highs in the Bitcoin price in the months following the event. As such, analysts expect this trend to accelerate as more institutional investors add BTC to their portfolios, further shrinking the supply.
In 2016, BTC busted out of the reaccumulation phase around 154 days after the halving. In 2020, meanwhile, the alpha crypto broke out 161 days post-halving.
Rekt Capital observed in a follow-up post that Bitcoin is breaking out from its range-bound re-accumulation range in the next couple of days this week:
“Over the next week or so, history suggests Bitcoin will be transitioning away from its ReAccumulation phase (red) into its Parabolic Upside phase.”
October Is Ripe For Bitcoin To Break Out
The third quarter has been quite challenging for Bitcoin, with headwinds such as the sales by the German government and Mt. Gox redemptions. However, Bitcoin has shown remarkable resilience this September, a seasonally bearish month, jumping 9%, essentially outshining its second-best September in 2016, when surged by 6% in the month.
Rekt Capital posited earlier:
“Who would’ve thought Bitcoin would print its highest-ever average return for the month of September in this cycle?”
Generally, investors expect a significant rally in October based on Bitcoin’s average historical returns, with BTC posting gains in nine of the last eleven years.
As of press time, the world’s largest cryptocurrency by market value was changing hands at $63,482, down a negligible 0.1% over the past 24 hours. BTC is currently 13.8% away from its March all-time high of $73,737.94.