The Bitcoin Halving Just Happened. Time to Load Up on Crypto?

The SEC’s approval of spot Bitcoin ETFs may have been the most consequential cryptocurrency-related event of 2024. However, another event just took place which might be equally significant for Bitcoin holders, or even more so.

The Bitcoin halving or halvening took place on Friday evening without much fanfare, but it could have far-reaching implications. It only happens once every four years or so, and has now occurred just four times since Bitcoin’s introduction in 2009.

The Bitcoin price was volatile in the weeks leading up to this year’s halving event. However, this may have just been a normal, expected retracement after Bitcoin rallied to $70,000 due to the market’s excitement over spot Bitcoin ETFs.

This time, the halvening reduced the reward for mining Bitcoin from 6.25 BTC to 3.125 BTC. The idea is to keep the circulating supply of Bitcoins to a minimum. It doesn’t alter the fact that there will only be 21 million Bitcoins in total.

JPMorgan analyst Reginald Smith noted that this month’s halving event will create challenges for Bitcoin miners. “All else equal, the halving will cut industry revenues in half, triggering a wave of consolidation and business closures,” Smith posited.

Courtesy: CNBC

Before you start worrying about popular Bitcoin miners like Marathon Digital and Riot Platforms, bear in mind that they’ll probably do fine if the Bitcoin price stays elevated. As a reminder, Bitcoin has more than doubled in price over the past year, even after the recent correction.

Also, the Bitcoin mining stocks listed in the table shown above already rallied hundreds of percentage points in 2023. So, in the grand scheme of things, a 30% or even a 40% correction isn’t the end of the world.

What about Bitcoin itself, though? Remember, halving events might present challenges to mining companies, but they’re ultimately beneficial for Bitcoin. Wouldn’t it be nice if the government could be similarly dis-incentivized from furiously printing up dollars?

There won’t be a dollar “halving” event anytime soon, but the Bitcoin halving offers the prospect of near-term opportunities. Past performance isn’t a guarantee of future returns, but after the first three halving events, the Bitcoin price rallied sharply every time.

Those rallies didn’t always happen immediately, but the numbers are nonetheless impressive. For the halving event to the top of the cycle, Bitcoin made a 93x move in 2012, a 30x move in 2016, and an 8x move in 2020.

Courtesy: CNBC

This may be tougher to trade than the chart would suggest, though. It would have required a crystal ball to get out at the right times and make 93x, 30x, and 8x profits after the first three Bitcoin halving events.

Besides, now everyone with an internet connection has immediate access to real-time information, and this time the halving event is on the front page of the financial press. So, it’s likely that the cryptocurrency market has already priced in the anticipated impact of the Bitcoin halving.

If you thought you were going to be clever and buy Bitcoin to front-run the post-halving rally, this probably isn’t your best strategy. By now, both institutional and retail traders have already thought of this strategy and positioned themselves accordingly.

That’s fine if you’re a confident, informed Bitcoin bull for the long term. Instead of loading up on Bitcoin as a clever strategy, forward-thinking investors can just buy some Bitcoin as a core holding, and add on the big dips as they inevitably occur from time to time.