If you are a long-term cryptocurrency investor then you need to be aware of the Bitcoin Halving Cycle and how to leverage it as part of your investment strategy profitably.
The Bitcoin Halving Cycle is a 4-year cycle that has consistently resulted in an increase in the price of Bitcoin and strong indicator for the next bull market.
If you’re wondering when the price of Bitcoin will go up or potentially when the next bull market is — the upcoming date for the next Bitcoin halving may be an excellent indicator.
What is the Bitcoin Halving Cycle?
‘Bitcoin halving’ is a programmatically set event that takes place every four years. It is part of the deflationary code built into the cryptocurrency which results in the supply of Bitcoins created to be cut by 50% every four years until the year 2140 when the limit of 21 million Bitcoin created is reached.
This deflationary mechanism results in the supply of bitcoin decreasing over time and if you remember your economics 101 (all variables remaining constant), this will result in an increase in price.
Historically, this is held to be true.
Over the last 3 Bitcoin halvings, the market price of Bitcoin has significantly increased and with it a new bull run.
When are the Bitcoin Halvings?
The first Bitcoin halving occurred on Nov. 28, 2012, after a total of 10,500,000 BTC had been mined (almost half of the total supply of Bitcoin).
The second halving occurred on July 9, 2016, and the latest Bitcoin halving was on May 11, 2020.
The next Bitcoin having is expected to take place on May 22nd, 2024.
Impact of Bitcoin Halving on the Price of Bitcoin
Taking a closer look at the first and second halving events, we can see a few patterns emerging:
- Approximately a year before the halving the price of Bitcoin starts to appreciate.
- Approximately a year after the halving, peak price is reached. The trend reverses, and the downtrend can last for up to two years (until the cycle repeats).
During the most recent Bitcoin halving (May 11th, 2020) we were witness to an all-time high of $63,789 reached on April 13th, 2021 — Just under one year after the last Bitcoin halving and coincidingly with the bull run and past halving events.
Looking into the past as an indication of what may happen in the future based on the Bitcoin halving, it is likely the following will occur:
- We can expect to see a continued downtrend in the market until early next year (2023).
- The next bull run and significant appreciation in the price of Bitcoin will occur around May 2023 — about a year before the halving event.
- We could see the market bottom around November-December 2022.
How to Profit from the Bitcoin Halving Cycle
The Bitcoin halving cycle is a very strong indicator of the future price of Bitcoin because it directly impacts the supply of the cryptocurrency and as a consequence, given the dominance of Bitcoin over the entire market, can be a powerful indicator for next bull market.
In past cycles, the price of Bitcoin began to increase as early as one year before the Bitcoin halving date and continued to increase until hitting all-time highs just over a year later (nicely coinciding with the bull market for the entire industry).
Currently, we are in the bearish part of this cycle and if the past is any indication of the future, it’s not expected the price of Bitcoin to increase significantly until early 2023 with the bottom hitting at least 19–20 months before the next halving which is around November-December of 2022.
To take advantage and profit from this knowledge would be to accumulate Bitcoin close or near to its absolute bottom in this cycle (around November to December 2022) with the expectation the beginning of the next bull run to take place in early 2023.
While this is not intended to be financial advice, the Bitcoin halving event has historically been a good indicator of the price movement of Bitcoin and the market at large.