Bitcoin Is Halving Soon — Will It Cause the New Bull Run? Is now the best time to invest in bitcoin?
- Historically, halving has been followed by a bull run, and Bitcoin has reached new all-time highs.
- Here's how to prepare for the potential bull market.
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Less than a year is left before the Bitcoin halving — an event when the reward for mining a Bitcoin block will be cut in half. Historically, the halving has been followed by a major bull run in the crypto market. Should we expect the crypto summer soon — and what other factors may push the Bitcoin price up?
What is Bitcoin halving?
Bitcoin supply is limited. No more than 21 million coins will ever exist, and the new ones are only issued to reward miners for running the network. Currently, the size of this reward is 6.25 coins per block — and every four years, it is reduced by half. The 2024 halving, expected in April, will lower the reward to 3.125 BTC.
Bitcoin was designed to be scarce: its limited supply protects it from inflation. With the growing demand for the asset, its price must steadily grow — which is exactly what's happening with Bitcoin over the years.
Three halvings, three rallies
Historically, the halving has been followed by a bull run, and Bitcoin has reached new all-time highs within 1–1.5 years after the event. Bitcoin gained 30X following its 2016 halving and 6.5X after the one in 2020. More importantly, the Bitcoin halving makes the entire market soar: in 2020–2021, hundreds of altcoins surged by 1,000%+.
Should we expect the same from the next halving?
Will Bitcoin halving trigger a new rally?
Pantera Capital, the world's largest crypto hedge fund, argues that Bitcoin will grow to $148,000 in the new market cycle. The firm emphasizes: "Bitcoin has historically bottomed 477 days prior to the halving, climbed leading into it, and then exploded to the upside afterward." This means that the latest bottom should have been hit in late 2022. If we look at the BTC price chart, we do see the local minimum of $15,490 in November. Bitcoin has historically reached the new ATH within 480 days after the halving.
Other analysts agree that we've already passed the lows of the current cycle. By December 2022, 65% of the pre-halving period was over — the mark usually followed by a few months of a sideways price movement, which eventually ended up in growth.
Bitcoin did recover from the local minimum – but failed to keep above $30K this August.
Some forecasts are, however, more restrained. For instance, MacroMicro, an analytical platform that consolidates global economic data, emphasizes the role of macroeconomic factors that may impact the prospective Bitcoin rally.
Three latest post-halving bull runs coincided with a substantial increase in money supply by the USA, EU, China and Japan central banks. In contrast, these financial authorities have been doing the opposite during the last year — rising rates to tackle inflation. The chances that they'll ease the liquidity in the following months seem low.
The more the money supply grows, the greater BTC price increases.
What else can pump Bitcoin?
One more factor favoring the Bitcoin price might be the approval of Bitcoin ETFs (exchange-traded funds).
An ETF is a fund that holds a portfolio of certain assets, and its shares are traded on an exchange. The owner of an ETF invests in the fund's portfolio by purchasing a share of it rather than buying the assets themselves.
In the case of a Bitcoin ETF, the fund owns Bitcoin, and investors can purchase the shares of this fund on an exchange. The value of these shares is tied to the Bitcoin price. For institutional investors, it is easy to embrace the first cryptocurrency — ETFs don't require buying and trading Bitcoin itself, which lets them avoid legal risks. For retail investors, ETFs are an opportunity to quickly diversify their portfolio with cryptocurrency without buying it directly.
Bitcoin ETFs are currently allowed in Canada and some other countries. While the USA is considered potentially the largest market for this kind of asset, the SEC has not approved any Bitcoin ETFs in America yet. But if it does, the first cryptocurrency may experience a large spike in trading volume — and, consequently, price.
How should I prepare for the bull run?
Sooner or later, the market will enter the growth phase of the cycle. Led by Bitcoin, it will also make other coins grow by 100%, 500%, and even 1,000% or more.
This is where picking the right coins to invest in is key. A sure way is doing your research and building up a balanced portfolio — when the market skyrockets, the chance of making gains is high, irrespective of what particular assets are included.
Another way is to leverage the portfolio composed by professional cryptocurrency researchers using AI tools trained to find the most promising coins. Those portfolios are publicly available as index tokens representing the combined value of multiple coins from different domains of the crypto market.
Some of the index tokens are focused on halving — their purpose is to identify the coins that may demonstrate the most impressive growth in the next bull run. For instance, Bitdriven is an index token representing the value of Bitcoin, Top-10 crypto coins by market cap and many other altcoins from Web3, DeFi and other segments that promise to make gains from 10X to 15X after April 2024.
The data from different years demonstrates that Bitcoin gains less and less value in terms of Xs after each bull run. Whether you leverage index tokens or not, picking the right altcoins will be the key to making your best returns in 2024.