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BTC halving
Key observation in crypto: BTC halving introduces seasonality
A key observation in cryptocurrency is that the Bitcoin halving of mining supply every 210.000 blocks has introduced a periodic behavior in cryptocurrency markets.
The following chart shows the historical Bitcoin's price. The blue vertical lines mark the dates when the mining supply of bitcoin was cut in half.
| date | Reward change in BTC |
|---|---|
| 11/28/2012 | 50 to 25 |
| 07/09/2016 | 25 to 12.5 |
| 05/11/2020 | 12.5 to 6.25 |
| 04/19/2024 | 6.25 to 3.125 |
As you can appreciate, there is nothing particularly enlightening about this graph. It is hard to see the effect of the halving of the mining supply. The price changes are so large that the information is lost in the details of price fluctuations.
Analysis of the Log(Price) chart. Bull and Bear markets.
If we look at the graph on a logarithmic scale, we can concentrate on the order of magnitude changes, paying less attention to the random fluctuations in the price. Then a pattern emerges:
Every 4 years on average, the mining supply is cut in half. Months after the halving of the mining supply a bull market sends the Bitcoin price to all-time highs, this bull market sends the price way above its cost of production and the whole thing ends up with a price bubble leading to a bear market that may last for years until the next halving occurs.
As the Bitcoin price skyrockets, people starts looking for alternative investments leading to the so called "Altcoin Season", where other major cryptocurrencies experiment a rise in price due to the Bitcoin bull market.
Comment on Bull / Bear markets
The following information can go with the graph:
| date | BTC Price $ | Days after halving to Market Peak | Percent Gain | Days after peak to Market Bottom | Percent Loss |
|---|---|---|---|---|---|
| 11/28/2012 | 13 | 335d | 7323% | 638d | 80% |
| 07/09/2016 | 593 | 518d | 2190% | 396d | 76% |
| 05/11/2020 | 9265 | 518d | 557% | 426d | 74% |
| 04/19/2024 | 70000 | ? | ? | ? | ? |
QR with live chart for technical analysis
QR with link to live BTC chart
What Problem is Seasonal Tokens designed to Solve?
In the long term there is no problem. Bitcoin is the best investment of all times. But in the short and mid terms some problems arise.
For miners, when the halving takes place, the cost of producing Bitcoin doubles overnight. This leaves many miners out of business.
After the bull market reaches it's peak, a bear market follows and typically lasts more than a year. During this time Bitcoin loses about 80% of the value at the peak leaving many crypto enthusiasts on a very bad situation.
The ideal situation would be if there were other cryptocurrencies whose prices are rising while Bitcoin's price is falling.
The problem is that the price of other major cryptocurrencies is highly correlated to Bitcoin's price, and when Bitcoin price falls, it brings all the markets with it.
The Seasonal Tokens Design
Creating another blockchain comparable to Bitcoin but with a different halving schedule is practically impossible due to the amount of resources needed, both in hardware, energy consumption, and widespread adoption.
But thanks to the Ethereum technology it is not necessary. The ERC20 technology allows the creation of digital assets with the economic principles embedded in Bitcoin's design. Decentralization and Security are handled by the Ethereum network.
You can think of Seasonal Tokens as four copies of Bitcoin running on the Ethereum Virtual Computer. All security and decentralization is handled by the Ethereum network.
Designed for Investment
- BTC was designed to be money.
- Ethereum is a Decentralized Virtual Computer
- Seasonal Tokens is an investment instrument to mitigate risk
Allowing participation of many actors in the creation of the asset.