Is the Bitcoin halving period a good time to invest in the crypto asset?

Bitcoin halving events have historically provided sustained bullish momentum for global investors often resulting in all-time highs. As the Bitcoin halving event in 2024 approaches on April 19, questions are being raised about whether the market will repeat itself once again. While investors are eagerly waiting for the right time to invest in the world's largest cryptocurrency, the question in their minds remains whether this would be the right time to invest.

Bitcoin price action history suggests that similar to past halving events, the halving event on April 19 may provide an opportunity for investors to invest their capital in the cryptocurrency. It set a new all-time high, climbing rapidly from $42,000 at the beginning of the year to $72,000 on March 12. The development comes just a week after breaking the 2021 all-time high of $68,729. During this period, the US Federal Reserve kept the interest rates intact. However, rate cuts are expected to take place in the later months of 2024.

The price action of the world's largest cryptocurrency may also be affected by unknown and dynamic macroeconomic conditions. In 2024, more than half of the world's population is voting to elect their governments. While this may be one of the aspects influencing the price of BTC, two major factors will impact volatility more. One of these factors will be the approval of 11 spot Bitcoin ETFs after a long delay, while another is the timing of the ETF's arrival – right before the BTC halving event. First, the approval has helped establish Bitcoin as a reliable global asset class. Approved ETFs are accumulating 30% of total capital flows into cryptocurrencies as of March 13 – worth more than $2 billion. For another, the halving event will reduce the global supply of Bitcoin, causing mining yields to drop from 900 to about half of previous levels. While halving events tend to have a positive impact on the price action of cryptocurrencies, the upcoming event is being touted as additionally significant in the history of the virtual digital asset.

Additionally, low supply becomes a driving factor for price increases, especially during breakouts that occur after a halving event in three parts – breakout, delivery, and accumulation. When supply decreases but demand remains, the price moves upward, making existing Bitcoins expensive. On the other hand, the lack of supply also exposes Bitcoin and the asset class in general, resulting in greater capital inflows. Experts suggest that these cycles set aspirations for investors that serve as a positive feedback loop, however, the ROI has not matched past all-time highs primarily due to VDA's inflated market capitalization. Could. However, investors should consider the fact that the event in April 2024 will see significant participation of capital from institutional investors and ETFs.While Bitcoin has long been widely known for its rapidly changing market dynamics, this paradigm shift could lead to new behavior by the cryptocurrency and contribute to a new level of complexity and additional demand. Some analysts predict that while the Bitcoin halving events have caused the cryptocurrency to set new all-time highs, the scenario could be different this year. These projections are based on the continued outflow of capital from gold and other valuable commodities that are being invested in Bitcoin ETFs at an unprecedented rate. This means that the recognition of Bitcoin as an asset class has increased, leading to more retail investors purchasing the cryptocurrency despite a lack of availability. There have been predictions that this could result in Bitcoin reaching an all-time high before the halving event, unlike previous events where this happened after. If the prediction comes to reality, it would mean that the entry phase has already been passed and for retail investors, there will be no significant further gains. However, there are different opinions also. Some experts believe that Bitcoin is underappreciating at the moment and will soon cross the $100,000 level, which will create a new all-time high after the halving event. These predictions also say that reaching this record level will involve a lot of volatility but investors need not lose patience. This reveals a lot about the impact of the halving event in 2024, which currently depends on particular aspects. (The author is Co-Founder and CEO, GoSats) (Disclaimer: Recommendations, suggestions, views and opinions given by experts are his own). These do not represent the views of The Economic Times)