What Should We Expect With This Bitcoin Halving?

Bitcoin’s halving is all over the news, but before you make any major decisions… Let me explain this to you.

As you may or may not know, in just a few days, bitcoin will undergo its fourth halving between April 18 and April 21.

But what does this even mean? 

Think of it like actual gold for a minute... 

If there was only so much gold ever available in the world to be mined, at certain points gold miners will have to dig deeper and deeper to get the same amount of gold. 

This is pretty much the situation. In this scenario, supply is constrained, and assuming demand stays constant, the price rises. 

In bitcoin terms, bitcoin miners will now have to work twice as hard to get the same amount of bitcoin rewards they did pre-halving, reducing the rate at which new bitcoins enter the market. 

Assuming demand stays constant, the constrained supply will eventually drive the prices higher.

The real question is WHEN? And can we profit from this event? Well…

What you want to do is think in 4-year cycles.

Here’s what’s true:

Year 1: On halving years (there have only been 3), bitcoin has increased roughly +125% 😀

Year 2: The year following a halving, bitcoin has average and INSANE +415% return 🤯

Year 3: Bitcoin usually falls -80% 😡

Year 4: Bitcoin rebounds, anticipating the next halving…

Net net, no matter how poorly timed, bitcoin has never returned less than 30% over a 4 year cycle. But is the actual event itself something to act on?

NOPE! IT’S TOTAL HYPE!!! 🤣😂😅

In fact, after the last halving, bitcoin spent over two months consolidating in a ~10% range before it started to make a move. Don’t believe me? See for yourself 👀

Today, Bitcoin is already up 45% for the year before halving, so what now?

What I CAN say is that the price of Bitcoin right now is a good (not great) place to start a position if you don’t already have one. 

If BTC falls below $60k, a steeper decline to $55k - $50k is possible.

That will be the time to hammer the table long. 

Any lower is pretty unlikely, but I would even start drooling if I saw that. Here’s what it would look like on the chart

All that said, it’s possible this year may not be like the others…

There are multiple factors affecting bitcoins price this year, namely the newly approved spot Bitcoin ETP’s and a scarcity of available coins on exchanges than during previous halvings. 

Assuming the lows are already in for BTC and averages stay roughly in line, this would put Bitcoin WELL OVER $150K NEXT YEAR 😶‍🌫️ Just before it plummets back down for its cyclical decline and the cycle repeats 🤪

My guidance…

My advice would be to analyze the opportunity of potentially buying this dip. However, consider holding back funds in case more opportunities arise. 

Bitcoin likes to fall on weekends and in the middle of the night, so maybe just throw some orders out there in case something happens while you’re sleeping. 

If that’s not your style, I’d suggest waiting at least 2 - 3 weeks AFTER the halving for BTC to base out THEN pick your spots.

There are also a handful of proxy plays I LOVE if you’re not able to play in the actual crypto markets. 

HOOD (Robinhood) has been an amazing stock this year and will likely pull back during this event, just before it reports earnings. 

Do some research and take a look. 

Also, don’t forget about Ethereum and the multitude of filings that have come through for Ethereum spot ETP’s. 

There is one available now that may be worth serious consideration as well, and that is ETHE (Grayscale Ethereum Trust).

Full disclosure: I’m currently long both of these. 😍

Besides all this, I recommend you to invest wisely, although you probably already know this. 😏

As always…

Rooting for you,

Paper Gains.

Disclaimer: This newsletter is not trading or investment advice but for general informational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog.