Upon designing what has later become the world’s largest blockchain network, Satoshi Nakamoto decided to incorporate an event happening approximately every four years to set a certain inflation rate for the creation of new BTC.
The so-called halving slashes in half the rewards miners receive for their work on the network, which, in theory, should mean an increasing price for the underlying asset if the demand remains the same or increases.
With BTC’s next halving right around the corner, one analyst has outlined a particularly simple but possibly quite profitable strategy for those who want to speculate on Bitcoin’s price movements in regard to each cycle.
History shows that Bitcoin’s price indeed heads north in the months after each halving. Whether that’s hype or people are actually purchasing more while the production rate has slowed down is still uncertain. However, every new low is higher than the previous cycle’s bottom, which leans more toward the latter.
Mags, a popular crypto analyst on X, has outlined a strategy that people could employ if they want to make a (not-so) quick buck by taking advantage of these cycles.
According to their graph, BTC’s price has bottomed approximately 500 days before each halving and peaks 500 days after completing them.
The last one took place in May 2020, and Bitcoin soared to a new all-time high of $69,000 19 months later (or just over 500 days).
Then came a massive bear market that pushed the primary cryptocurrency south hard to around $15,000 in late November and December 2022. The fourth halving should take place within weeks, meaning that it will be completed in 16-17 months (approximately 500 days) after the bear market’s bottom.
Some of the predictions for this cycle see BTC hitting $150,000 or maybe even $200,000 in the year after the upcoming halving, as reported earlier.
Still, it has to be said that this strategy is for those aiming to speculate on BTC’s price movements before and after each halving. Bitcoin HODLers tend to disagree and are always on an accumulation spree.
Additionally, history does not guarantee future price movements, so investors should do their own research before delving into any investment. If you want to find out more about Bitcoin’s halving, check out our video below.