Bitcoin’s quadrennial halving generates euphoria among crypto enthusiasts

As the Bitcoin halving is getting closer, the crypto market is filled with optimism and enthusiasm about the potential of this event to boost the price of the leading digital asset. According to a survey across different demographics, 84% of investors have high expectations for the halving event, believing that Bitcoin will surpass its 2021 all-time high. And they could be right, as at the time of writing, Bitcoin has succeeded in rising above the $51,000 level, which hasn’t happened since December 2021. This shows Bitcoin is on a continued rally that started in January last year. Even more exciting is that Bitcoin also surpassed the $1 trillion mark in terms of market capitalization, so it’s no wonder that more and more investors want to learn how to buy bitcoin these days. 

What triggered this massive change in the Bitcoin ecosystem? Well, it all has to do with the rising positive investor sentiment, driven by spot Bitcoin ETFs and a potential bull market that is expected to happen soon. Bitcoin has seen a spike in investments – not only on an individual level but also on an institutional one, which played an essential role in its price appreciation. The long-awaited Bitcoin halving will likely increase Bitcoin’s market price even more, so investors have a valid reason to feel enthusiastic. But of course, this enthusiasm shouldn’t make any investor forget about the short-term volatility that exists within the crypto space. Bitcoin halving creates a significant chess game in the crypto market: while investor sentiment may be bullish in the long run, it’s essential not to ignore the psychological aspects around the event that could lead to significant volatility. Alongside the exuberant bullish action, there will also be dramatic sell-offs, and it’s important to be prepared for what will come.

That being said, the Bitcoin halving, scheduled for April 2024, has major implications for the cryptocurrency market, which we will explore in what follows so that investors can successfully navigate the event.

What is Bitcoin halving, and what is its impact on the crypto market?

Essentially, Bitcoin halving has the purpose of regulating Bitcoin’s supply, in order to keep its scarcity. The event happens every four years, halving the reward for Bitcoin miners. The latest halving occurred in May 2020, with the reward being cut from 12.5 to 6.25 BTC per block. This year, it will drop to 3.125 BTC. As we count down to the halving event, taking a look at past Bitcoin halvings can be a good starting point to understand how they can impact the market.

From a historical perspective, Bitcoin halvings have been a catalyst for major price surges: in 2016, on the day of the event, the price of Bitcoin was $650, and 150 later, it increased to $758. A similar pattern was in 2020, with Bitcoin’s price boosting from $8,800 to $10,900 over the course of a few months only. The halving of mining rewards causes Bitcoins to enter the market at a lower rate, thus decreasing supply and pushing the price of the digital asset further. It’s worth noting that halving events aren’t the only factors that can trigger price movements, but they do play a significant role in shaping market sentiment.

Bitcoin halving has a major impact on the dynamics of the market, generating significant excitement, and causing media hype. This increased attention attracts institutional players, driving up the demand for Bitcoin, which ultimately increases its price.

Investors should not let enthusiasm affect their rational decision-making

There’s no doubt that the halving has massive potential for the crypto ecosystem, but it’s imperative to plan strategically if you want to profit from the event. There are a few ways you can do so and we will discuss them further.

Learn about Bitcoin’s fundamentals

You’re probably getting tired of hearing this again and again, but researching is critical when investing in cryptocurrency. Without educating yourself on Bitcoin’s fundamentals, you can’t expect to get so far in your investing journey.

You need to learn about every single factor that influences the price movements of Bitcoin, such as media hype, supply and demand, user sentiments, and government regulations. By doing so, you will be able to adjust your strategy based on the changes in the market, thus increasing your chances of making profits.

Hold your Bitcoins for the long run

This is a common strategy that many investors use, allowing them to accumulate Bitcoin, as they wait for the price of the digital asset to appreciate in the long run.

Long-term holding gives you resilience in times of strong market fluctuations, allowing you to capitalize on long-term gains instead of chasing short-term profits. In other words, it gives you the advantage of increased stability, which is something that many investors aim to achieve in such an unpredictable market.

Diversify, diversify, diversify

While it makes sense to add Bitcoin to your portfolio, it shouldn’t be the only asset you invest in. Instead, you should spread risk by choosing different types of assets.

Diversification is one of the golden rules in crypto investing, and it’s essential to follow it in order to capture potential opportunities in the market. Given that different asset classes perform differently in the market at distinct times, diversification helps you minimize losses, because you don’t bet on a unique investment. In other words, you don’t sacrifice too much of your money when trying to gain returns.

Monitor industry news

Finally, it’s essential to keep track of what’s going on in the crypto industry. If you aren’t aware of the current trends or market sentiment, how can you take advantage of a potential opportunity? You can’t! Because you don’t know how to adjust your strategy accordingly.

So, make sure to choose some reliable resources and follow their updates regularly. Subscribe to crypto newsletters, check blog posts on reputable websites, and so on. This is a proactive approach that will help you stay informed and help you take advantage of opportunities while also preparing you for potential negative scenarios.

The bottom line

Bitcoin halving is an event with far-reaching implications in the crypto market. As it is getting closer, investors must stay informed and take a strategic approach to help them capitalize on potential gains while reducing losses as much as possible.

While Bitcoin euphoria is now back and will likely continue to characterize the market, investors must remember to remain rational and ensure their decisions align with their investment goals.