Is the Bitcoin Halving a Good Time to Invest in Cryptocurrency?

Bitcoin halving events have historically provided global investors with subsequent bullish momentum that has often led to all-time high levels. As the 2024 Bitcoin halving event on April 19 approaches, questions have been raised as to whether the market will repeat itself once again. Investors are eagerly awaiting the right time to invest in the world’s largest cryptocurrencywith lingering doubts about whether it is the right time to invest.Bitcoin price The stock history suggests that, similar to past halving events, the April 19 halving event could provide investors with an opportunity to invest their capital in the cryptocurrency. It showed a steep climb from $42,000 at the beginning of the year to $72,000 on March 12 to set a brand new all-time high. The development came just a week after it broke the 2021 all-time high of $68,729. During this period, the US Federal Reserve kept interest rates on hold. However, rates are expected to be cut in the final months of 2024.

The world’s largest cryptocurrency’s price action could also be affected by unknown and dynamic macroeconomic conditions. 2024 will see more than half of the world’s population vote to select their respective governments. While this may be one of the influential aspects for BTC’s price, two main factors will have a greater impact on volatility. One of these factors will be the approval of 11 Bitcoin spot ETFs after a prolonged delay, while the other is the timing of the ETF’s arrival, just before the BTC halving event. For the first, the approval has helped establish Bitcoin as a trusted global asset class. The approved ETFs are accumulating 30% of the cryptocurrency’s total capital inflow as of March 13, or over $2 billion in value. For the second, the halving event will reduce the global supply of Bitcoin, leading to a reduction in mining returns from 900 to almost half of previous levels. Although halving events have a positive effect on the price performance of the cryptocurrency, the upcoming event is also considered a pivotal event in the history of the virtual digital asset.

Furthermore, the reduced supply becomes a driving factor for price surges, especially during the breakouts that follow the halving event into three parts: breakout, distribution, and accumulation. When there is a shortage of supply but demand persists, the price tends to rise upwards as existing Bitcoins become expensive. On the other hand, the lack of supply also stresses Bitcoin and the overall asset class, resulting in higher capital inflows. Experts suggest that these cycles set aspirations for investors that work as a positive feedback loop, however, the ROI may not match the previous all-time highs in the past mainly due to the higher market cap of VDA. However, investors need to consider the fact that the halving event in April 2024 will have significant participation from institutionalized investors and capital from ETFs.

While Bitcoin has long been known for its rapidly changing market dynamics, this paradigm shift could lead to new behavior from the cryptocurrency and contribute to a new level of complexity and additional demand. Some analysts are predicting that while Bitcoin’s halving events have led to the cryptocurrency setting new all-time highs, the scenario could be different this year. These projections are based on the continued outflow of capital from gold and other precious commodities that are being invested in Bitcoin ETFs at an unprecedented rate. This means that Bitcoin’s recognition as an asset class has been strengthened, which has led to more retail investors buying the cryptocurrency while there is a shortage of supply. There have been predictions that this has led to Bitcoin reaching all-time highs before the halving event, unlike previous events where it happened later. If this prediction comes true, it would mean that the entry phase has already been passed and there will be no significant profits for retail investors in the future.

However, there are also different opinions. Some experts believe that Bitcoin is still undervalued at the moment and will soon surpass the $100,000 level, creating a new all-time high after the halving event. These predictions also state that to reach this record high, considerable volatility will be involved, but investors should not lose patience. This speaks volumes about the impact of the halving event in 2024, which currently depends on specific aspects.

(The author is co-founder and CEO of GoSats)

(Disclaimer: Recommendations, suggestions, opinions and views provided by experts are personal. They do not represent the views of the Economic Times)

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(Disclaimer: The opinions expressed in this column are those of the author. The facts and opinions expressed here do not reflect the opinions of www.economictimes.com)

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