Cryptocurrency traders are closely monitoring the Bitcoin market as a potential “bargain-buying” window opens ahead of the upcoming Bitcoin halving scheduled for April. Rekt Capital, a prominent pseudonymous crypto trader, has outlined a five-stage market pattern, signaling that investors may have a limited two-week timeframe to capitalize on favorable prices before a pre-halving rally begins.

Bitcoin Halving: A Catalyst for Bullish Sentiment

The Bitcoin halving, occurring approximately every four years, involves cutting mining rewards in half for miners. Historically, this event has been considered a bullish catalyst for Bitcoin’s price.

Rekt Capital highlights a pattern from previous Bitcoin halvings, characterized by steep price dips in the months leading up to the event, ultimately resulting in substantial returns for investors. The upcoming halving in 2024 appears to be following this historical pattern.

Bitcoin has already undergone an approximately 18% retracement in January, signaling a two-week window during which Bitcoin may experience another significant pullback. According to Rekt Capital, this period could represent one of the final opportunities for investors to acquire Bitcoin at attractive prices before the anticipated pre-halving rally begins.

Pre-Halving Rally Phase

Following a potential short-term pullback, Bitcoin typically enters the “pre-halving rally” phase approximately 60 days before the halving event. During this phase, short-term traders seek to capitalize on growing anticipation and “buy the hype” leading up to the halving. However, as the halving date approaches, a “sell the news” sentiment tends to set in, often occurring one to three weeks before the halving.

In the previous two Bitcoin halvings, Rekt Capital notes significant price dips during the weeks preceding the event—38% in 2016 and 20% in 2020. This pre-halving retrace is common as traders take profits, resulting in a temporary price decline.

Once the halving event occurs, Bitcoin enters a relatively “boring” phase characterized by sideways price action, lasting an average of 150 days. This period can disappoint investors expecting immediate price surges post-halving, leading to some getting “shaken out” due to the lack of significant movements.

Finally, Rekt Capital highlights the “parabolic uptrend” phase following months of accumulation and sideways trading. Bitcoin experiences accelerated growth during this phase, often reaching new all-time highs.

While Rekt Capital emphasizes the halving’s importance in shaping Bitcoin’s price action, not all experts agree. Some argue that the impact of halving on price is diminishing, with other factors such as liquidity and market dynamics taking precedence. Ralph Zagury, Chief Investment Officer of Swan Bitcoin, suggests that flows and market dynamics are the primary drivers of price in 2024, making the halving less impactful than previously thought.