Bitcoin halving hype starts to revolves around crypto communities. What is this Bitcoin halving actually? Bitcoin halving is an event where the reward for Bitcoin miners is reduced by half. Bitcoin halving occurs every four years.
The purpose of Bitcoin halving is to keep the total supply of Bitcoin limited and reduce the potential for inflation. However, economic logic around Bitcoin halving is still questioned, considering new bitcoins will continue to be mined for the next century.
The next Bitcoin halving is expected to happen in 9 July 2024. At that time, the reward for Bitcoin miners was estimated to decrease from 6.25 BTC to 3.125 BTC. Historically, the reduction of Bitcoin miner rewards has led to an increase in the price of BTC after halving.
Price Prediction Bitcoin Halving 2024
An analyst from Bitcoin Data Newsletter predicts that the price of Bitcoin will be in the range of US$42,000 to US$48,000 after halving (9 July 2024). He also mentioned that the peak of the Bitcoin halving cycle is expected to happen seven months later, 28 November 2024.
Advise For Investors During Bitcoin Halving
Of course, investors don't want to miss out on the hype of Bitcoin halving, but hey, let's not be hasty. Here's advice on what investors should do during Bitcoin halving to gain more profit.
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Adopt Dollar Cost Averaging Method
Investors are also advised to adopt the dollar cost averaging (DCA) method. The DCA method involves investing the same amount of assets at regular intervals. The DCA method is highly recommended by expert investors such as Warren Buffett, Benjamin Graham, and others.
"If you like spending six to eight hours per week working on investments, do it. If you don't, then dollar-cost average into index funds," said American investor and businessman Warren Buffett, as quoted from Nasdaq.
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Best Time to Invest
Historical data indicates that the price of Bitcoin consistently increases one month before halving or specifically 9 June 2024. For investors who want to increase Bitcoin ownership at a specific time, one month before halving is considered as the best time.
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Selective to Buy Altcoin
Lastly, investors are encouraged to be more selective in choosing altcoins. Aspects that should be considered such as the trustworthiness of the project (the people behind it), the narrative it presents, and the project's development.
The Impact of Previous Bitcoin Halving
Head of Institutional Research at Coinbase, David Duong observed price movements and economic events during the three previous Bitcoin halvings. Here are the key points from his research entitled "Bitcoin Halvings and the Liquidity Problem" released on June 2023.
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First Bitcoin Halving
First Bitcoin halving occurred on 28 November 2012. At that time, the price of Bitcoin was around $12.26. The first Bitcoin halving occurred amidst economic policies such as QE3 by the Federal Reserve (September 2012) and the "Outright Monetary Transactions" program by the European Central Bank (ECB) in response to the European debt crisis (August 2012).
Duong mentions that the impact of the first Bitcoin halving on its price wasn't immediately apparent. However, based on Coinmarketcap data, the price of BTC skyrocketed one year later, reaching its peak at $2,402 on 1 December 2013.
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Second Bitcoin Halving
Second Bitcoin halving occurred on 9 July 2016. At that time, the price of Bitcoin was around $648. The second Bitcoin halving occurred after the Brexit referendum (23 June 2016), which triggered the Bank of England to continue its bond-buying program.
While the Brexit event itself may not have directly impacted Bitcoin liquidity, the economic uncertainty and volatility it represented could have contributed to a surge in Bitcoin prices. However, based on Coinmarketcap data, the price of BTC experienced a significant increase one year later at $1,128 on 13 July 2017.
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Third Bitcoin Halving
While the pandemic stimulus package applied, there was a significant movement in the liquidity of Bitcoin. However, based on Coinmarketcap data, the price of BTC significantly skyrocketed one year later, traded at $55,847 on 11 May 2021.
Conclusion
Analyst predicts that Bitcoin halving in 2024 will have a positive impact on the prices of crypto assets. However, he sees this narrative as still speculative due to insufficient research evidence.
"With only three halving events historically, we have yet to see a clear pattern fully emerge, particularly as previous events were contaminated by factors like global liquidity measures," said Head of Institutional Research at Coinbase, David Duong, as quoted from his research paper.