Bitcoin Halving is always considered to be the biggest event in the crypto space because of its impact.
This is because most investors create a narrative that with Bitcoin halving, the price of Bitcoin always increases due to the fact that Bitcoins that are available to purchase becomes more scarce.
The narrative creates a huge influx of buying volume based on FOMO or Fear of Missing Out, essentially leading to a price increase of Bitcoin itself. But realistically is that always the case?
Comparing Bitcoin’s Price After Halving
Halvings usually trigger a bull market, not only for Bitcoin, but other crypto currencies as well, since most still follow the lead of Bitcoin.
Looking at previous halvings, it can be seen that Bitcoin always increases its price, but the increase happens to be less and less overtime.
In the first halving, Bitcoin’s price increased around 3,836.32% from November 2012 until the peak of the bull market in December 2013.
The second halving also gives similar results where Bitcoin’s price increased 2,992.07% from July 2016 until January 2018.
Bitcoin’s third halving shows a similar price gain of around 1,010.78% from April 2020 to November 2021, creating a pattern that will probably happen again in 2024 until 2025, realizing the predicted bull market of 2025.
It is clear from the graph above that Bitcoin’s halving increases its price. So, in order to capitalize on it, investors and traders need to set up a strategy and proper risk management to make long term safe and profitable in the future.
Should I Buy Bitcoin Before Halving?
If you are just looking to be an investor, it is recommended to buy before the halving started, arguably because Bitcoin’s price always goes up as mentioned before.
Looking at data from Coinglass, the monthly returns of Bitcoin after halvings usually suggested price gains. But if you look closely, after halvings, usually the price of Bitcoin does not increase directly, instead there is a delay before prices go up significantly, triggering the bull market.
So there still might be a chance to buy Bitcoin after halving is done, but a safer bet would be to buy it before the halving happens, preferably a year or two before it, which is usually during the bear market.
But as most experienced investors would say, no one can time the market perfectly, so in order to capitalize on the bull market that usually happens after halvings, it is better to buy before the halving happens and have a strategy to buy when the price dips after halving before reaching new highs.
Dollar Cost Averaging Strategy
A strategy that can be done is Dollar Cost Averaging (DCA) which is a way to increase your bitcoin holdings by buying it gradually.
With the DCA method, investors will always increase their Bitcoin in their portfolio because they regularly buy Bitcoin in a fixed amount at certain conditions or at certain scheduled times that are set by themselves.
For example, everytime Aaron receives his paycheck from his job, he will automatically use 10% of it to buy Bitcoin and he will always do that as long as he receives his paycheck.
Another example might come from Susan, who also buys Bitcoin when the price of Bitcoin goes down, no matter how much it goes down.
Both will have a significant amount of Bitcoin if treated with discipline, which will lead to a huge profit in the bull market that usually comes after the Bitcoin halving.
One of the ways to automate this strategy is to do this with Bitrue’s auto invest feature so that all of the orders can be done automatically.
Conclusion
Overall Bitcoin halving usually has a positive impact on its investors. But one thing that cannot be set certain is the percentage gain of Bitcoin itself because as you can see from the graph above, the percentage of gain in Bitcoin price from each halving differs.
So in order to capitalize on this movement without any disappointments, investors need to treat their strategy stoically with no hopes of a certain price increase that is too achievable to reach.
This will maximize investors profit in the bull market and keep psychological aspects in tack, leaving investors from the portfolio-harming disease in the crypto space known as FOMO.
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The views expressed belong exclusively to the author and do not reflect the views of this platform. This platform and its affiliates disclaim any responsibility for the accuracy or suitability of the information provided. It is for informational purposes only and not intended as financial or investment advice.