Bitcoin’s fourth halving is now in the record books, having taken place last Friday.
So, what happens now?
In short, get ready for some weakness/sideways action that frustrates lots of “me too” investors, then a major rally.
Let’s flesh this out.
First, if you’re new to the Digest, the halving is an event specific to Bitcoin where “miners” (think, computer whizzes) solve complex computer puzzles to release new Bitcoin. Their reward for doing so is an amount of Bitcoin that’s already baked into the algorithm. Each halving reduces this reward by half, hence the name “halving.”
The three prior halvings have been very bullish for Bitcoin’s price for months on either side of the event. But right around the event itself, there’s usually a significant price pullback.
This time has been no different.
Since hitting a new all-time high of $75,830 back in March, Bitcoin fell roughly 20% to $60,000. As I write Monday morning, it trades at about $66,100.
For those details, let’s go to our crypto expert, Luke Lango:
Bitcoin soared from January to April. Now, here at the Fourth Halving, BTC is pulling back.
This is very consistent with historical behavior around Halving events…
The good news is that, in both the second and third Boom Cycles, the pre-Halving selloff didn’t last long.
To get a sense of this, let’s take a trip down memory lane to the previous Halvings.
In each cycle, Bitcoin consolidates for a few weeks before starting to climb about two months after the Halving event.
From there, Bitcoin never looked back in either cycle — in 2021 or 2017.
Prior to the Second Bitcoin Halving in July 2015, Bitcoin’s value dipped by 18%. Similarly, before the Third Bitcoin Halving in May 2019, it experienced a 14% decline.
Following both events, Bitcoin not only recouped these losses but also embarked on a monumental ascent over the subsequent 12 months.
Post-Second Halving, Bitcoin’s value surged by an astonishing 284%. After the Third Halving, it catapulted by an even more staggering 559%.
This cycle of a robust pre-Halving rally, followed by a sudden downturn just before the Halving, is a well-established trend. It’s the norm, not the exception.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Unfortunately, as noted at the top of this Digest, many “me too” investors lose their conviction during this downturn, selling just before Bitcoin begins to climb.
Here’s Rekt Capital with more:
The [retracement around the time of the halving] makes investors question whether the Halving was a bullish catalyst on price after all.
The Pre-Halving retrace is followed by multi-month re-accumulation.
Many investors get shaken-out in this stage due to boredom, impatience, and disappointment with lack of major results in their BTC investment in the immediate aftermath of the Halving.
Once Bitcoin breaks out from the re-accumulation area breakout into the parabolic uptrend. It is during this phase Bitcoin experiences accelerated growth on its way to new All Time Highs.
There’s a key difference about this latest crypto boom cycle – it has institutional support.
Back in January, for the first time ever, the SEC approved the first US-listed exchange-traded funds (ETFs) to track bitcoin. This was a watershed moment, enabling enormous institutional players to wade into the crypto sector.
The January decision greenlit Bitcoin ETFS from BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck. This has opened the door to massive capital inflows that we haven’t seen in prior booms.
Here’s Bloomberg from a few weeks ago:
Add this eye-popping statistic to the list of superlatives driving crypto’s latest boom cycle: A record $520 million stampeded into BlackRock Inc.’s Bitcoin ETF in a single day.
The iShares Bitcoin Trust (ticker IBIT) saw its biggest one-session haul Tuesday, marking the largest daily inflow so far among the batch of new US exchange-traded funds investing directly in the world’s biggest cryptocurrency. It was also the second-largest daily intake for any US ETF across all asset classes…
And here’s perhaps the most bullish detail of all…
The run-up in Bitcoin’s price in the lead-up to this latest halving likely reflects only a handful of institutional investors taking their position. We’ll probably see more professionals moving into the space as this year continues. This means the post-halving boom this time around has the potential to surprise to the upside in its potential gains.
Here’s Stephane Ouellette, chief executive of FRNT Financial, an institutional platform focused on digital assets:
The [pre-halving rally back in March] does appear to be majorly influenced by the BTC ETFs.
Some estimates suggest that less than 20% of investment advisers have been approved by their firms to put their clients into the product. That is a process that’s likely to play out over the course of a year.
Given the potential for a coming wave of institutional dollars, what’s Bitcoin’s price target?
As you’d guess, the estimates are all over the place, but here’s some perspective from The Washington Post:
“We would expect the price of Bitcoin to have a strong performance over the next 12 months,” said [Bitwise senior crypto research analyst Ryan Rasmussen].
Rasmussen notes that he’s seen some predict gains reaching as high as $400,000, but the more “consensus estimate” is closer to the $100,000-$175,000 range.
Altcoins are simply “alternative coins.” Basically, they’re any cryptocurrency other than Bitcoin.
Let’s return to Luke for why altcoins could treat your crypto capital far better than Bitcoin from here:
Bitcoin always dominates the “first halves” of boom cycles, or the 12 months before a halving. During that time, BTC dominance rises as BTC leads the way and altcoins lag behind.
That has indeed happened this time around. Over the past 12 months, Bitcoin has been leading and altcoins have generally been lagging. Again, very typical.
But, in the second halves of the boom cycles – or the 12 months after a halving – altcoins always take the lead. They tend to regain momentum immediately after halving, before fading a bit, then absolutely soaring around seven to eight months after the halving.
To illustrate the firepower potential with altcoins, Luke provided some staggering details.
The third halving took place in May 2020. By the end of the following year, over 70 from the top-performing 300 altcoins had seen their value skyrocket by more than 1,000%.
That’s nearly 25% of the top cryptocurrencies achieving gains of 1,000% or more over roughly a year and a half.
One of the biggest criticisms of altcoins is that they don’t possess any intrinsic value. “What do they do?” “Where does their value come from?” and “Why are they necessary?”
Questions like these are usually the predicate for the true, underlying question: “Without a good way to price an altcoin because you don’t know its value, how do you pick the ones most likely to surge?”
This is where Luke and his team believe they have an advantage:
My team and I have spent the past few years developing a powerful quant system that uncovers equities before they surge in price. We’ve already put this quantitative stage-analysis system to work in several of my stock services.
But now, in addition to stocks, we’ll be using it to identify cryptocurrencies in the early stages of big technical breakouts.
Frankly, over the past few months, that quant system has been kicking butt and taking names with stocks.
In the first quarter of 2024, we used this system to book partial profits of roughly 110%, 55%, 77%, and 94% on four of our stock positions.
All those gains happened in a matter of months. Some took just a few weeks.
Tomorrow morning at 10 am. Eastern, Luke will detail how the system works, provide the results of back-tests to illustrate how it catches soaring altcoins, and he’ll even give away the name of one altcoin the system just flagged.
You can automatically reserve your seat for this free event by clicking here.
I’ll give Luke the final word today:
Based on our back-tested results of this system, you could have made 1,929% from Bonk (BONK-USD), 873% from Apex Token (APEX-USD), and 1,945% from Moon Tropica (CAH-USD), in only 12 weeks this year.
And tomorrow morning, I’m going to unveil it to the public for the first time ever…
The current halving-fueled crypto rally is already minting 1,500 new millionaires every single day. And my new system is the best way to become one of them. It allows you to experience the most upside in altcoins while minimizing risk to the downside.
Reserve your seat now.
Have a good evening,
Jeff Remsburg
The post The Bitcoin Halving is Done – Here’s What Happens Next appeared first on InvestorPlace.
