The Macro Diagonal Theory of Bitcoin offers an intriguing perspective on how Bitcoin's price behaves in relation to its halving events. Developed by Rekt Capital, this theory has shown reliability during the current halving period from late 2023 to late 2024. The theory delves deeper than other Bitcoin price patterns, providing a comprehensive view of Bitcoin's price movements.

Explaining Key Terms of the Theory

For those new to the concept, understanding some key terms can make the theory more accessible. The Macro Diagonal is a support line that extends from Bitcoin's previous all-time high after the last halving to the upcoming halving date. This line serves multiple roles, acting as resistance before the halving and support after.

Support and resistance are zones or lines that indicate price levels below or above which Bitcoin's price rarely falls or rises, respectively. The pre-halving period starts 3-4 months before the halving date, while the post-halving period extends up to 365 days after the halving. The term "Parabolic Upside" refers to the significant price increase in Bitcoin after the halving period, often depicted by a parabolic-shaped graph.

Phases of the Macro Diagonal Theory

The theory is divided into six phases, each representing a specific price behavior of Bitcoin around the halving date. These phases include:

Pre-Halving Rally: Before each halving, Bitcoin typically experiences a rally leading to a new all-time high. The 2024 rally was influenced by news of Bitcoin ETF approval and increased Bitcoin adoption.

Pre-Halving Retrace: Just before the halving, Bitcoin consolidates and corrects its price, retracing from the resistance level known as the macro diagonal.

Macro Diagonal Rejection: Initially, the macro diagonal acts as a resistance, causing Bitcoin to consolidate its price. However, it later becomes a support after Bitcoin crosses it post-halving.

Post-Halving Reaccumulation: After the halving, Bitcoin enters an accumulation phase, consolidating near the pre-halving rally level due to increased buying interest.

Macro Diagonal Retest: Bitcoin tests the macro diagonal again, crossing the resistance level and establishing it as a support in the subsequent period.

Post-Halving Parabolic Upside: The final phase sees a parabolic rally in Bitcoin's price, reaching new all-time highs and entering a massive bull rally.

Conclusion

The Macro Diagonal Theory of Bitcoin provides valuable insights into Bitcoin's price behavior around its halving events. By understanding the theory's key terms and phases, traders and enthusiasts can better anticipate Bitcoin's price movements and make informed decisions. As the current halving period progresses, it will be interesting to see how well the theory holds and what insights it may offer for future halving events.