But while crypto analysts are expecting a massive rally following the Bitcoin halving, the last halving was the start of yet another crypto winter, before the bull market truly began.
Shock and Awe: Bitcoin Halving Expectations May Not Match Reality
The upcoming Bitcoin halving in May 2020 might take crypto investors by surprise.
The digitally-coded event will slash the block reward miners receive for validating each new block added to Bitcoin’s blockchain by half.
Related Reading | Analyst: Crypto Market Pullback Imminent But May Not Occur For Months
The fewer supply miners receive, doubles the cost of production per BTC overnight.
Because of the cost of production so largely outweighs the price of Bitcoin, miners stop selling until prices catch up.
The lack of supply creates an imbalance of demand that causes valuations to surge exponentially in the already scarce asset.
Because of this design, Bitcoin is expected to skyrocket in value after the halving.
Stock-to-flow models put the value per BTC at $55,000 or higher immediately following the halving, due to the impact the event has on the limited supply of the cryptocurrency.
And investors are correct, at the core. Each halving has kickstarted massive, year-long rallies that led to new all-time highs after the crypto asset goes parabolic from FOMO.
$BTC #bitcoin I’m not sure where this idea that halvening = ULTRA MOON NOW came from…but looking at 2016 
– Entirely sure our time will come but– What if we are here, but at 1/7th the speed?– Are you prepared for a downtrend into next Winter? pic.twitter.com/RuYzWmYpWy
— COFFEE 
(@overheardcoffee) February 19, 2020
However, it isn’t a situation where the halving happens, and suddenly Bitcoin takes off like a rocket ship.
Instead, what has happened in the past, was that a pre-halving rally led Bitcoin to new local highs, but failed to set a new all-time high ahead of the event.
Could Another Six-Month Downtrend Plague the Crypto Market Post-Halving?
Once the Bitcoin halving took place, days later, a massive, steep, 40% selloff happened that took a full six-months to play out.
After Bitcoin topped out in June 2019, it fell into another extended six-month downtrend, from $14,000 to $6,400.
If a similar selloff happens once again post Bitcoin halving, the price should fall from roughly $18,000 back to $10,500 support, before the true bull market begins.
After this last six-month-long downtrend, the first-ever cryptocurrency on experienced limited pullbacks while a parabolic advance reached higher and higher until a new record was set.
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Crypto investors looking for an example of this need to look no further than Litecoin. Just ahead of its halving the altcoin experienced a deep selloff that wiped out much of the asset’s pre-halving gains.
However, those that can withstand the coming post-Bitcoin halving selloff, will end up riding the rally all the way to a new all-time high.