How to Prepare for Bitcoin Halving in 2024: Expert Predictions & Tips

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Bitcoin halving is the most anticipated event of the crypto industry that occurs once every four years. According to the Bitcoin halving countdown, April 20, 2024, is the date when Bitcoin is expected to mint its 840,000 block and subsequently undergo its fourth halving.

From an investor’s perspective, halvings are seen as milestone events that have ushered crypto bull markets. For miners, halvings bring challenging business conditions where miner revenues are cut by half and production costs per Bitcoin theoretically double.

In this article, we conduct an in-depth Bitcoin halving analysis, as well as provide potential post-halving price scenarios and tips for both investors and miners from industry experts on how to prepare for the fourth Bitcoin halving cycle.

Key Takeaways

  • Bitcoin is expected to undergo its fourth halving on April 20, 2024.
  • Historical charts showed Bitcoin prices took between 12 to 18 months to peak post-halving.
  • The introduction of spot BTC ETFs has created unprecedented market conditions.
  • Graeme Moore, the head of tokenization at Polymesh Association, predicted that the price of BTC could go as high as $100,000 past halving in 2024.
  • Anndy Lian, an intergovernmental blockchain expert, predicted that the BTC price post-halving has the potential to surge 10% higher than its all-time high, which currently surpasses $73,000.
  • With more funds flowing into BTC ETFs, Lian added, the BTC price could go up an additional 30% by the end of the next quarter.
  • Yuya Hasegawa, an analyst at the crypto exchange Bitbank, expected a strong rally during the latter half of this year.
  • Arthur Hayes, the former CEO of cryptocurrency exchange BitMEX, said the Bitcoin price action directly before and after could be negative.
  • Goldman Sachs warns investors against relying too much on previous Bitcoin halving cycles for new BTC price predictions.

How to Prepare for the Next Bitcoin Halving

Tips for Investors

The crypto market is unpredictable, but that shouldn’t keep investors from learning about historical patterns and possible outcomes to stay ahead of the curve.

Here is how investors can prepare for the Bitcoin halving event.

1. No Near-Term BTC Price Increase Guaranteed

Financial markets are forward-looking. Trades are made based on the potential of future returns. Therefore, it may come as no surprise that investors have been accumulating Bitcoin since the fourth quarter of 2023 in preparation for Bitcoin’s fourth halving, having seen BTC prices surge in past halving cycles.

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Bitcoin whale Michael Saylor’s company MicroStrategy alone has spent more than $1 billion to acquire over 34,000 Bitcoins between October 2023 and February 2024.

On March 11, Michael Saylor announced that Microstrategy now holds 205,000 BTC. MicroStrategy acquired its latest batch of 12,000 BTC for approximately $68,477 per coin.

As of April 17, 2024, Bitcoin prices have gained over 38% year-to-date and retraced 16% from its new all-time highs of over $73,000 to its current stand of around $60,800.

Bitcoin (BTC) Price Chart Year-to-Date. Source: TradingView, as of April 17, 2024

Given the predictable and anticipated nature of halving events, you should keep in mind that rational investors are most likely to buy Bitcoins ahead of the event.

Therefore, the Bitcoin halving event does not guarantee an immediate uptick in Bitcoin prices. We could even see a sell-the-news event as euphoria around Bitcoin halving fades away.

2. Positive Long-Term Impact of Halving

Over the mid-to-long term, halving is expected to have a positive impact on the price of Bitcoin due to the reduction of BTC supply. Supporting this theory is the historical market data that showed that Bitcoin prices surged astronomically over the next 18-month period following past halving cycles.

  • According to Fidelity Asset Management, Bitcoin prices surged as much as 10,485% within 371 days after the first Bitcoin halving.
  • Following the second halving in July 2016, Bitcoin prices rose as much as 3,103% over the next 525 days.
  • Similarly, after the third halving period in May 2020, Bitcoin prices jumped as much as 707% within the next 546 days.

3. Impact of Spot BTC ETFs

The introduction of spot BTC ETFs has created unprecedented market conditions that halving cycles of the past did not encounter.

Since the spot BTC ETFs were approved on January 11, 2024, the popularity of the instrument has created a Bitcoin demand shock.

For reference, the average BTC daily demand on ETF trading days currently stands at 4500 Bitcoins surpassing an average of 921 new Bitcoins minted per day, Coinshares reported.

Bitcoin ETF Demand vs. Supply.
Bitcoin ETF Demand vs. Supply. Source: CoinShares

If the spot BTC ETF remains consistent when the supply of Bitcoins reduces by 50% post-halving, the supply-demand principles of economics tell us that Bitcoin prices might rise.

Tips for Miners

One of the biggest challenges that the BTC halving event poses for miners is the reduction in mining rewards.

Apart from the 50% cut, the halving might also increase competition, heightening mining difficulty and potentially increasing the price of transaction fees.

Yuya Hasegawa, an analyst at the crypto exchange Bitbank, told Techopedia in a note that miners often have to consider how they will manage to operate with 50% less revenue.

“This has affected Bitcoin’s hash rate and the network’s difficulty post-halving, as some of them halt operation until the difficulty drops low enough for them to make a profit again. Some others sell their Bitcoin holdings to make up for decreased cash flow.”

However, Hasegawa added that miners should also consider the release of spot BTC ETFs, which could make the situation a little different.

This is because spot BTC ETFs are buying more than they can produce almost every day, thus overwhelming the BTC supply.

“If the ETF inflow continues to overwhelm Bitcoin’s supply, which it probably will since it already is buying more than the network can produce in a day even before halving, the price may continue to rise post-halving, and that could maintain mining profitability.”

Moreover, miners should also prioritize energy efficiency as the cost of electricity is a major component of mining expenses, Anndy Lian, an intergovernmental blockchain expert and the author of NFT: From Zero to Hero, explained.

This can be done through the use of efficient hardware and access to low-cost energy sources, which can help maintain profitability post-halving.

Lian told Techopedia:

“In the past, most miners looked at standard operation costs. I hope they will do more research and stay informed about market behaviors and trends to make educated decisions regarding their operations. They should evaluate their financial health, including debt levels and capital reserves, to withstand potential revenue drops due to the halving. This would also give them a gauge on how fast they expand.”

Anthony Vassallo, Senior Vice President, Crypto, at Silicon Valley Bank wrote in a blog post on March 4, 2024:

“The halving presents a critical juncture for miners. The reduction in rewards will test the efficiency and adaptability of mining operations, potentially affecting Bitcoin’s hash rate and network security in the short term. However, the long-term view remains positive. The halving reinforces Bitcoin’s scarcity and value as a digital store of wealth.”

Vassalo also highlighted that technological advancements and scaling solutions such as the Lightning network could increase the volume of transactions on the Bitcoin blockchain.

This could also increase the total value of transaction fees collected by miners, sustain mining activities, and network security even after the last Bitcoin is mined.

Bitcoin Price Scenarios to Consider With Approaching BTC Halving Event

Post-Halving Bitcoin Price Action: Analyst Views

Historically, BTC halving events led to the cryptocurrency’s price increases due to the reduced supply of new Bitcoin tokens entering the market.

Lian predicted that the BTC price post-halving has the potential to surge 10% higher than its all-time high, which currently surpasses $73,000.

However, he added that post-halving and with more funds flowing into BTC ETFs, the BTC price could go up an additional 30% by the end of the next quarter.

“It’s also worth noting that predictions vary widely, and the actual outcome will depend on a multitude of factors, including market demand, investor sentiment, and broader economic conditions. Always remember that investing in cryptocurrencies carries risk, and prices can be highly volatile. It’s advisable to conduct thorough research and consider seeking advice from financial experts before making investment decisions,” Lian added.

The launch of spot BTC ETFs earlier this year was a huge success, and their demand could grow even bigger later in the year, according to Hasegawa.

He added that while the Federal Reserve is still waiting for inflation to calm down, there is a possibility they could start cutting rates, which could increase demand for both BTC and ETFs and facilitate more cash flow.

Bitbank’s Hasegawa concluded:

“Furthermore, halving will crunch Bitcoin’s supply, so we could expect that those three elements (rate cuts, ETFs, halving) will together create a strong rally sometime during the latter half of this year.”

Graeme Moore, the head of tokenization at Polymesh Association, predicted that the price of BTC could go as high as $100,000 past-halving in 2024 as the cryptocurrency is already experiencing massive heights.

“We are already seeing the effect of the upcoming halving with a 50% increase in price since February. Bitcoin is now over $72K. In addition, the relentless bid from the new Bitcoin ETFs is proving that the broader market is beginning to see the value in a global, decentralized, provably scarce asset. If the previous cycles are an indicator, the price of Bitcoin will continue to rally into the halving and after.”

Meanwhile, Arthur Hayes, the former CEO of cryptocurrency exchange BitMEX, suggests the Bitcoin price action directly before and after could be negative.

He wrote in a blog post on April 9, 2024:

“The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs. That is why I believe Bitcoin and crypto prices in general will slump around the halving.”

Therefore, Hayes believes it could be wise to refrain from trading until May. He said:

“Given that the halving occurs at a time when dollar liquidity is tighter than usual, it will add propellant to a raging firesale of crypto assets. The timing of the halving adds further weight to my decision to abstain from trading until May.”

Historical Bitcoin Halving Analysis

A study of historical Bitcoin halving charts showed that BTC consistently saw price increases in the weeks ahead of halving events. Following halving events, Bitcoin showed a tendency to trade within a range in the next months.

Key Phases of Bitcoin Halving. Source: CoinMarketCap

Bitcoin most explosive gains post halving. Source: Glassnode, VanEckFollowing the second Bitcoin halving, BTC price traded range bound between $600 and $800 from July 2016 to November 2016.

Similarly, following the third Bitcoin halving cycle in May 2020, BTC traded in the $8,000-$14,000 range for the next six months before finally breaking out to scale new all-time highs.

Historical charts also showed that Bitcoin prices took between 12 months to 18 months to hit the peak price during the first three halving cycles.

BTC’s performance after previous halvings. Source: Goldman Sachs

Market catalysts that supported Bitcoin prices during each cycle included the European debt crisis of 2009-2012, the initial coin offering (ICO) boom of 2016, and ultra-low interest rates of the post-pandemic era.

This year, Goldman Sachs warned its clients from relying too much on the past halving cycles. In a note to clients on April 12, as reported by CoinDesk, Goldman’s Fixed Income, Currencies and Commodities (FICC) and Equities team wrote:

“Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly. Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions.”

The Bottom Line

The upcoming BTC halving is poised to impact both investors and miners. While historical data suggests a potential for long-term price increases, short-term volatility and uncertainty remain prevalent.

Investors should exercise caution, considering the unpredictability of market reactions post-halving, and conduct thorough research before making investment decisions.

Miners facing reduced rewards and heightened competition must prioritize efficiency and strategic planning to navigate the challenges ahead.

As the crypto landscape evolves with the introduction of spot BTC ETFs, staying informed and adaptable will be crucial for all stakeholders in the Bitcoin ecosystem.

Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the cryptocurrency market, the spread of your portfolio, and how comfortable you feel about losing money.

The information in this article does not constitute investment advice and is meant for informational purposes only.

FAQs

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Mensholong Lepcha
Crypto & Blockchain Writer
Mensholong Lepcha
Crypto & Blockchain Writer

Mensholong is an experienced crypto and blockchain journalist, now a full-time writer at Techopedia. He has previously contributed news coverage and in-depth market analysis to Capital.com, StockTwits, XBO, and other publications. He started his writing career at Reuters in 2017, covering global equity markets. In his free time, Mensholong loves watching football, finding new music, and buying BTC and ETH for his crypto portfolio.