Bitcoin halving is not always a bullish trend

Option market probabilities should come as no surprise to litecoin (LTC) investors, who saw the value of their holdings fall sharply following the reward halving, which took place on Aug. 5, 2019.

On that day, the cryptocurrency was trading just above $100. However, by December, the price of single litecoin had dropped below $50.

Its hash rate, or the computing power needed to validate transactions on the blockchain, also tanked by 70 percent in the five months to December, as reward halving and the subsequent drop in prices whitted away mining profitability. That forced small and inefficient miners to shut down operations or move on to mining other currencies.

Pre-halving rally?

Historically, bitcoin has set new market cycle tops in the calendar year of halving, but ahead of the event, according to Rekt Capital.

For instance, bitcoin’s bear market from the December 2013 high of $1,150, ran out of steam near $150 in January 2015. The cryptocurrency then rose to a high of $502 in November 2015, confirming a bullish reversal.

Prices then fell back to $365 in February 2016 before hitting a new cycle top $778 in June – a month ahead of the reward halving, which took place in July 2016.

The high of $778 reached in June 2016 was the highest price from the bear market low of $150, but was well short of the record high (at the time) of $1,153, reached in December 2013.

Similar price behavior was seen in the months leading up to the 2012 reward halving.

If the same thing were to happen again, the cryptocurrency would set a new cycle top above the June 2019 high of $13,880 in the next two months. The options market, however, indicates the history is unlikely to repeat itself.

Currently, the options market sees only 3 percent probability of bitcoin rising above $14,000 by the end of March.

The probability of a move above $10,000 in March is also quite low at 21 percent.