Bitcoin Halving Cycles: Potential Investment Opportunity for Long-Term Gains?
Summary:
Bitcoin's halving cycles, happening every four years, are often linked to surges in its values, leading to new all-time highs, making these periods potentially profitable for long-term investors. Bitcoin's recent price spike was facilitated by record inflows into the US-based Exchange-Traded Funds (ETFs). The cryptocurrency might witness a 130-150% surge within a year post halving, potentially pushing its value to between $125,000 and $150,000 by 2025, based on historical patterns.
The bitcoin halving cycles, occurring every four years, have often been linked with spikes in the cryptocurrency market, leading to fresh all-time highs in bitcoin prices. So, is the eagerly awaited halving an opportune moment to invest in this foremost cryptocurrency? Vetle Lunde, senior analyst at K33 Research, maintains that based on historical evidence, halvings could be an advantageous point for long-term investors to step into the market. Lunde disclosed to Cointelegraph that although immediate market response to halving is typically lukewarm, each halving event has invariably presented an advantageous entry point into the market. The optimal period starts between 150 to 400 days after the halving, when the compounding impacts of diminished miner selling pressure begin to positively influence bitcoin's trajectory.
On February 28, Bitcoin surpassed $60,000 for the first time in over two years, a full 47 days ahead of the halving event. In the past week alone, the premier cryptocurrency has appreciated 30% in value. The bitcoin halving event essentially curtails the rate of new bitcoin issuance into the marketplace by 50% every four years. The bitcoin network is projected to halt creation of new bitcoins once 21 million coins have been generated, which will occur around 2140, the year of the final halving.
Bryan Legend, CEO of Hectic Labs and investor, holds the view that short term gains can be reaped in the run-up to the halving. Hectic Labs CEO, however, concedes that predicting the exact peak point to exit the market is a complex undertaking. Bitcoin's recent sprint to $67,611 was significantly facilitated by record inflow into 10 newly launched ETFs in the U.S. CoinShares analyst James Butterfill revealed that total assets under management (AuM) are now tantalizingly close to the all-time high, merely a few billion shy of November's peak of $86 billion.
The report further discloses Bitcoin's dominance, as it accounted for 94% of total inflows, totaling $1.72 billion, primarily propelled by US-based funds which netted an inflow of $1.88 billion. Sergei Gorev, risk manager at fintech platform YouHodler, suggested that Bitcoin ETF inflows play a significant role in the current rally, along with pre-halving anticipation. He highlighted the scale by stating that daily Bitcoin purchases by the ETF funds outstrip daily Bitcoin production by a factor of ten.
Could Bitcoin hit $120,000 by end of 2024? According to Lunde, while Bitcoin prices typically surge ahead of halving, they usually consolidate shortly after. However, Lunde anticipates only a short-lived correction before Bitcoin resumes its rally to new record peaks. If historical patterns hold true, Bitcoin might witness a 130-150% surge in the subsequent year post halving, which could push it to the band of $125,000 - $150,000 by 2025.
Bryan Legend from Hectic Labs predicts Bitcoin's year-end price could settle anywhere between $80,000- $85,000, in the pessimistic case, or even reach $120,000-$130,000, in an optimistic situation. According to Legend, the factors shaping this outcome would principally hinge on macroeconomic conditions, and the underlying mood in financial markets by 2025. In an absolute bullish scenario, Bitcoin could potentially peak at $180,000-$200,000.
Published At
3/4/2024 10:51:22 PM
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