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Bitcoin | Bitcoin Guides

When Should I Buy Bitcoin? Before or After the Halving?

Author

Jay Solano

Tags

Reading time

4 mins
Last update

Author

Jay Solano

Tags

Category

Bitcoin / Bitcoin Guides

Reading time

4 mins
Last update

Author

Jay Solano

Tags

Reading time

4 mins
Last update


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The upcoming Bitcoin halving, scheduled for April 2024, has investors wondering if it is now the right time to buy Bitcoin. Historically, halvings have been followed by price surges, but should you invest right as it happens, or wait for the after-effects?

Looking back, halvings have often triggered bull runs, propelling Bitcoin to new price peaks. However, prices tend to experience slower growth immediately following the halving. This suggests that 150 to 400 days after the halving might be the ideal entry point. During this period, the reduced selling pressure from miners seems to benefit Bitcoin’s price.

The pre-halving period has already seen significant activity, with Bitcoin briefly surpassing $60,000 for the first time in over two years. This rally is fueled by a combination of factors: anticipation for the halving and the emergence of new Bitcoin ETFs in the US. These funds are buying Bitcoin at a rapid pace, exceeding the creation of new coins and contributing to the price increase.

What is Bitcoin Halving?

Bitcoin halving is a pre-programmed event that occurs roughly every four years, where the reward for mining a new block is cut in half. This means miners, who are responsible for verifying and adding transactions to the Bitcoin blockchain, receive 50% fewer Bitcoins for their work.

Why Bitcoin Halving is important?

Bitcoin halving plays a crucial role in limiting the total supply of Bitcoin to 21 million coins. This scarcity is a key factor influencing its price. As the supply gets closer to its finite limit, the economic principle of scarcity suggests that the value of each remaining Bitcoin could potentially increase.

Analysts are predicting potential future price increases based on historical trends and the diminishing rewards of each halving. Some forecasts suggest a rise to $125,000-$150,000 by 2025, indicating long-term potential despite a possible temporary dip after the halving. More optimistic predictions even reach $200,000, promising substantial gains for early investors.

However, caution is advised. The current surge resembles the 2021 frenzy, raising concerns about a potential bubble. High trading activity and open interest indicate a heated market, which could lead to increased volatility and risk. While these signs suggest a strong bull market, they also warn of a potential sharp correction if investor enthusiasm becomes excessive.

Furthermore, Bitcoin’s all-time highs in various currencies, including Euros and British pounds, showcase a global increase in demand. But past cycles advise investors to be cautious. The excitement surrounding new highs can quickly turn into panic if the market corrects, as many analysts anticipate.

When is the next halving?

The next Bitcoin halving is expected to occur in April 2024. This event will see the block reward decrease from the current 6.25 Bitcoins to 3.125 Bitcoins.

It’s important to note that past halvings have been followed by price increases, this is not guaranteed. Bitcoin is a highly volatile asset, and its price is influenced by various factors beyond halving events. Investing in any cryptocurrency carries inherent risks. 

What happens to Bitcoin when it halves in 2024?

In simple terms, the reward for mining Bitcoin will be cut in half. This means miners, who verify transactions on the Bitcoin network, will earn fewer new Bitcoins for their work.

It’s like reducing the number of new gold nuggets being found each year, even though the total amount of gold (21 million Bitcoins) stays the same. This scarcity could potentially increase the value of each Bitcoin in the future, similar to how rare precious metals tend to be more valuable.

However, it’s important to remember that past performance doesn’t guarantee future results. While Bitcoin’s price has increased after previous halving events, it’s not guaranteed to happen again in 2024.

Ultimately, the decision to invest in Bitcoin now, during, or after the halving depends on your individual risk tolerance and investment goals. Carefully consider the potential benefits and risks before making any decisions.

Bitcoin halving price history

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It’s tricky to say exactly when to buy Bitcoin around a halving. Here’s why:

  • Limited data: There have only been 3 halvings, so it’s hard to predict future trends.
  • Price dips before: While not guaranteed, Bitcoin’s price has dipped slightly in the month before each halving.
  • Market optimism: Halvings are seen as positive events (fewer new coins), often leading to pre-halving price increases.
  • Mixed results: After halvings, the price has gone up twice and down once.

Long-term, Bitcoin has generally done well: reaching new highs between each halving.

So, what to do?

  • Buying before is a gamble: There’s no guarantee the price will rise.
  • Historically, Bitcoin performs well long-term: Holding for several years might be a safer strategy.

Remember: This is not financial advice. Do your own research before investing in any cryptocurrency.