Bitcoin Price Prediction: How to Trade BTC After Bitcoin Halving
Bitcoin halving, which happens roughly every four years, cuts the reward for mining new blocks in half, reducing the supply of new bitcoins and possibly impacting BTC’s price. The upcoming April 2024 halving has stirred anticipation, given past surges in price following such events. Crypto market sentiment is bullish and several industry experts project rising prices. What can we expect from the recent Bitcoin price predictions? This article explores the Bitcoin halving event and its potential outcomes, based on expert predictions, while providing practical tips for trading BTC post-halving on Bybit.
Key Takeaways:
Bitcoin halving reduces the reward for mining new blocks, affecting BTC’s scarcity and potentially its price. Historically, Bitcoin’s price has surged after halvings, due to decreased supply and increased demand.
Bitcoin traders should consider potential outcomes after the upcoming April 2024 halving, such as a bullish surge, steady growth or a bearish decline in price, each carrying its own opportunities and risks.
Various trading strategies can be employed post-halving, including capitalizing on historical price patterns, short selling in bearish markets or using dollar-cost averaging for a neutral market stance. All of these strategies aim to effectively navigate the volatility of Bitcoin trading.
What Is Bitcoin Halving?
Bitcoin halving is a pre-programmed event that occurs after every 210,000 blocks mined (about every four years), reducing the reward for mining new blocks of transactions by half. This process limits the total supply of new Bitcoin and increases its scarcity, which may affect its price and demand.
Why Is Everyone Excited About Bitcoin Halving?
The upcoming Bitcoin halving, expected by April 2024, is sparking excitement in the crypto world.
Why all the hype? Well, it comes down to basic economics: supply and demand. Right now, miners receive 6.25 bitcoins for every block they mine, but after the halving, that reward will be cut to 3.125 bitcoins.
Basic economic theory applies: when an asset’s supply decreases, and the demand remains the same or increases, its price rises. After past halving events, Bitcoin's price has typically risen.
For instance, after the first halving in 2012, the price of Bitcoin soared from about $12.20 to over $1,000 in 2013. Then, after the second halving in 2016, its price went from around $650 to almost $20,000 in 2017. More recently, after the third halving in 2020, Bitcoin's price shot up from around $9,000 to over $57,000 in 2021.
Nevertheless, it's not just about the price. Bitcoin halving also points out what makes Bitcoin unique: unlike regular (fiat) money, which governments can print on a whim, Bitcoin has a set limit of 21 million coins that will ever exist. This scarcity, combined with its decentralized nature, makes it different from traditional currencies. With each halving, the rate at which Bitcoin is being created decreases. Bitcoin becomes scarcer, reinforcing its status as a unique form of money independent of any central authority.
Bitcoin's price has been soaring lately, thanks to the positive vibes around the newly approved Bitcoin spot ETFs. It's been quite a ride, with the crypto spiking 45% since the beginning of the year and crossing the $60,000 mark. While its price did briefly surpass its record high of $69,000, set back in November 2021, on Mar 5, 2024, Bitcoin’s price has since dropped, and is currently hovering around $65,000. Now users are hoping it will once again hit and surpass its all-time high.
With the imminent halving event, market experts are anticipating even more price boosts for Bitcoin.
Post-Bitcoin Halving Price Prediction: 3 Potential Outcomes
Bitcoin price action often resembles a roller coaster. Predicting its future performance is no easy task.
Although many believe that the Bitcoin halving will be positive for prices, it's important to remember that nothing is certain.
There are plenty of factors at play, such as institutional adoption, regulation, competition and unexpected events that can sway market sentiment.
Bitcoin could soar to new heights, just as it did after previous halving events. This outcome would mean a surge in demand and in its price, possibly exceeding $100,000 or even $200,000. While this would be great news for Bitcoin holders, it would also mean more volatility and risk in the crypto world.
A second possible scenario would see Bitcoin chugging along steadily with moderate growth or stability. This outcome would mean that the upcoming halving didn't shake things up too much, and that the market had already priced in the event. Bitcoin could trade around $50,000 or $60,000. It's not as thrilling as a bull run, but it's still decent for investors.
On the flip side, Bitcoin could take a tumble after the halving. This drop could occur if the reduced block reward makes mining less profitable, or if there are negative news developments or regulatory issues. Some analysts even warn of prices dropping below $42,000. Obviously, this would be tough for Bitcoin holders, but it could also present opportunities for those looking to buy at lower prices.
Bullish Post-Bitcoin Halving BTC Price Prediction
This outcome seems most probable, due to several key factors: the historical connection between Bitcoin halving events and price surges, growing interest from institutional investors and the limited supply of new bitcoins.
Experts and analysts suggest that Bitcoin will likely continue its upward trend after the next halving in 2024. Looking at past data, Bitcoin's price typically sees a slight rise leading up to a halving and significant increase afterward. A recent survey supports this sentiment, with 84% of respondents expecting Bitcoin to surpass its all-time high following the halving — especially investors in the MENA (Middle East and North Africa) region.
If Bitcoin does surge after the halving, its challenge of asset classes like gold as a preferred store of value would continue.
New highs might even attract more investors, including hedge funds, banks, corporations and governments, all of them looking to diversify their portfolios and hedge against inflation. This surge could stimulate further innovation and adoption of blockchain technology across various sectors and industries.
However, owning Bitcoin means you’re bound to face risks. Regulatory hurdles, technical issues, security breaches, market manipulation, environmental concerns and competition from other cryptocurrencies are all factors that could impact its post-halving performance.
Optimal BTC Trading Strategy: Breakout Trading
To capitalize on rising Bitcoin prices, you can use the breakout trading strategy, which captures significant price movements by pinpointing crucial levels of support and resistance. The idea is to anticipate a breakout from these levels, in the hope that when the asset's price breaks out of a trading range, it will likely continue moving in that direction.
Breakout traders employ chart patterns, technical indicators and confirmation techniques to identify potential breakouts, and enter trades accordingly. This strategy is versatile and applicable across different markets and time frames. However, traders must be mindful of false breakouts and market noise.
How to Execute This BTC Trade
Identify a horizontal resistance level and an upward-sloping support trend line on the BTC price chart, forming an ascending triangle pattern that suggests a potential bullish breakout.
You can use technical indicators such as moving averages, Bollinger Bands®, Donchian Channels and volume to confirm a breakout. Look for confirmation through high volume, price and time when the price breaks above the resistance level.
Enter a long position at the breakout point, and set a stop loss to mitigate potential losses. Alternatively, you can wait for a pullback to a support level, and enter a long position there.
Consider the triangle's height for setting a profit target, or use trailing stop-loss orders to ride the trend for as long as possible. This strategy offers an approach that takes advantage of potential upward movements in BTC's price.
Bearish Post-Bitcoin Halving BTC Price Prediction
Another potential outcome of the next Bitcoin halving is a significant drop in BTC’s price, either before or after the event.
Since halving reduces the block reward, it makes mining less profitable for some miners, especially those with high electricity costs or outdated equipment. This reduction in reward might induce some miners to exit the market, decreasing the network's hash rate and security. It could also heighten the risk of a 51% attack, in which a malicious entity controls over half of the network's computing power and can theoretically manipulate transactions.
The halving could also create selling pressure, as investors decide to take profits or cut losses before or after the event. Sales could trigger a negative feedback loop in which lower prices prompt more selling, and vice versa.
If the halving coincides with negative news or regulatory problems such as hacks, scams, bans or lawsuits, it could undermine confidence in Bitcoin and expose it to legal and operational risks.
While a significant price drop would be tough for Bitcoin holders, it could also present the following opportunities:
Lower prices could draw in new investors, who see Bitcoin as a bargain or a hedge against inflation and fiat currency devaluation. This sentiment could boost long-term demand and adoption, and enhance network effects and resilience.
Depressed Bitcoin prices could spur innovation and development in the crypto space as entrepreneurs and developers work on new solutions and use cases for Bitcoin, such as scaling and privacy enhancements, improving its functionality and competitiveness.
Lower prices could encourage a more decentralized and diverse mining ecosystem. Smaller and more efficient mining operations could gain a competitive edge over larger ones, enhancing network security, sustainability and censorship resistance.
Optimal BTC Trading Strategy: Short Selling
Short selling can be a viable trading strategy in a bearish market following a Bitcoin halving. This approach involves selling an asset without first owning it. Short selling allows traders to profit from the downward trend of the market, as well as hedge against the risk of holding Bitcoin in a bear market.
How to Execute This BTC Trade
Choose the USDT Perpetual contract and BTCUSDT pair for trading, representing Bitcoin's price in USDT. Set up your short position details, including limit order price, order value and leverage, with caution as higher leverage increases risk. Use the sell short option with take profit and stop loss to define your exit strategy, setting trigger prices in USDT or as a percentage of the entry price.
Confirm your order and monitor your position details, including entry price, unrealized profit and loss, margin, liquidation price and funding rate, which determines fees every eight hours, based on market conditions.
Neutral Post-Bitcoin Halving BTC Price Prediction
A neutral impact is possible because the Bitcoin halving may not have a significant short-term impact on Bitcoin's supply and demand. Although the creation of new bitcoins may slow, the existing supply remains available for trading. If the market anticipates the halving and adjusts prices accordingly, the demand for Bitcoin might not change drastically after the event.
A stable price could reduce Bitcoin's volatility and risk, making it more appealing to both institutional and retail investors. In turn, this could encourage more innovation and development within the Bitcoin ecosystem, shifting focus from speculation to utility. Additionally, a neutral price reaction might limit the impact on miners, who would be dealing with lower rewards and higher costs.
Overall, a neutral price post-halving could indicate Bitcoin's maturation as a digital asset, demonstrating increased resilience to external shocks.
Optimal BTC Trading Strategy: Dollar-Cost Averaging
In a neutral market after a Bitcoin halving, dollar-cost averaging (DCA) becomes a viable trading strategy. This method involves purchasing a fixed amount of Bitcoin at regular intervals, regardless of price fluctuations. The goal is to minimize the impact of volatility, and spread out the cost of entry over time.
DCA is a straightforward and effective approach to accumulating Bitcoin, obviating the need to time the market. It also helps investors steer clear of emotional decisions that could be driven by fear or greed.
How to Execute This BTC Trade
Start by depositing USDT or other supported fiat or cryptocurrencies into your Spot account. Then, transfer funds to your Derivatives account for trading BTC futures contracts with leverage. Choose between USDT Perpetuals and Inverse contracts, based on your preference and risk tolerance.
In the Derivatives trading interface, select the BTCUSDT pair. Analyze the market using charts, indicators and different order types.
Enter your position using a limit, market or conditional order, being cautious with leverage. Set levels for taking profit and limiting losses, either as absolute values or percentages of your entry price. You can manage your position manually or with automation tools.
Continually buy BTC at fixed intervals, regardless of price fluctuations, to average out your cost over time. Automation platforms such as Mudrex or Skilling™ can help with this.
Monitor your position and account performance using the dashboard and profit/loss analysis. Keep an eye on the funding rate and mark price, both of which affect your profits and losses.
Hold your position until you reach your target return or duration, or if significant market changes occur.
Purchasing BTC Through Bybit Discount Buy
Bybit Discount Buy lets you purchase BTC at a lower price than the market rate on the settlement date, provided it doesn't exceed a specific threshold known as the Knockout Price. Here's how to use it:
Log in to your Bybit account and go to the Finance tab on the navigation bar. Hover over Earn, and click on Discount Buy.
Choose a plan that suits your investment goals and risk appetite. You can select a plan based on the Coin, Purchase Price, Knockout Price and Knockout APR.
Input your investment amount and confirm your order by clicking on Buy Now. You cannot modify or cancel your order once it is placed.
Wait for the settlement date to view the outcome of your investment. You’ll either buy BTC at a lower price than the market rate, or receive your principal plus an additional APR in USDT.
The Bottom Line
Navigating Bitcoin trading post-halving requires careful consideration of several factors. Whether you're bullish, bearish or neutral on Bitcoin's prospects, you can tailor your strategies to each scenario. From capitalizing on technical trends to leveraging short-selling or dollar-cost averaging, Bybit offers a range of tools to execute your trading plan effectively.
Remember that while the upcoming Bitcoin halving event will ignite considerable excitement, prudent risk management remains key in the volatile world of crypto trading.
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