Bitcoin Whales Disrupt Long-held Halving Cycle Model
According to on-chain analytics firm Glassnode, the current cycle of Bitcoin’s growth is showing an interesting deviation from the previously observed patterns.
In cryptocurrency cycles, the events known as halvings have been used to define these cycles. Halvings are periodic blockchain events that permanently reduce the block rewards miners receive when they solve blocks. These events occur roughly every 210,000 blocks mined on the network, or about once every four years.
They are often chosen as the starting and ending points for Bitcoin cycles because they have a profound impact on the market’s economics, as the asset’s production rate is halved after each halving. The increasing scarcity of the asset is a compelling narrative that has historically driven price rallies following halving events.
The next halving event is expected to take place in the first half of the coming year. Currently, miners receive 6.25 BTC per block they mine, so after this next event, they will only receive 3.125 BTC as their reward.
Various models have emerged throughout Bitcoin’s cycles, but such a trend seems to be breaking in the new cycle, as highlighted in the chart below.
The focus here is the percentage growth rate at which the number of whales has been increasing in each cycle. The analytics firm defines “whales” as addresses holding at least 1,000 BTC in their wallets.
Note that the addresses mentioned here refer not only to individual wallets but also to “a cluster of addresses controlled by the same network entity,” estimated through advanced heuristics and Glassnode’s proprietary clustering algorithm.
From the chart, it is evident that the number of whales increased by 436% in the first cycle, while they only grew by 139% in the second cycle. The third cycle even witnessed a lower growth rate of around 91%.
This indicates that with each Bitcoin cycle, while whale numbers continue to increase, their percentage growth rate is gradually declining.
However, the current cycle seems to be different from the previous ones, as the growth in the number of whales is actually stronger compared to the previous cycle.
Whales have increased by 98% since the beginning of this cycle, but it’s noteworthy that there are still around 344 days until the next halving event. It remains to be seen whether the trend will continue until the end of the current cycle or if the cycle will indeed conclude with a broken pattern.
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