Bitcoin halving is just around the corner. This typically marks a subsequent rally spreading over the entire crypto market, yet it’s rather difficult to state anything clearly. In this article, we are going to explore how BTC halving may affect the crypto space this time.
What are the implications of halving?
Bitcoin halving is a pre-programmed event where the mining reward for each block in the blockchain is split in half. As a result of the April halving, this incentive will drop from the current 6.25 to 3.125 BTC per block. Since halving takes place every 210,000 mined blocks, the next one is expected to occur when the block height reaches 840,000. Given that miners are completing blocks every ten minutes on average, halving is anticipated on April 19 or 20.
In the short term, you can count on spikes in the Bitcoin price, perhaps even wait for it to reach new all-time highs (ATH). After this event, however, there may commence a period market correction, with the volatility skyrocketing in the coming month. Therefore, it is essential to make informed decisions when it comes to buying or selling bitcoin.
Such an event can be described by the popular saying: “Buy on the rumor and sell on the news”. This means that even though the halving is seen as the upside, it could otherwise trigger the winding down of price gains and the onset of a market correction.
Speaking of our own outlook for the bitcoin price over the next few months, we can observe the next potential ATH surging past the $78-80k mark prior to another correction to around the $55k mark. It is recommended to consider this $50-55k price range if you are thinking of entering the market and going long.
As mentioned earlier, halving is a significant event for the cryptoverse as a whole since the total supply of BTC is taking a huge tumble, something that is likely to drive prices up in the mid-run given the steady demand. It is also worth noting that the halving after-effects are usually felt a few months following the event.
Much of the above has to do with the burning interest of institutional investors in BTC following the recent approval of spot bitcoin ETFs in the US. Apart from that, the US presidential election is projected to be perceived by the market as a driver of economic growth, which is also favorable for cryptocurrencies.
So, taking into account all these factors and the cyclical nature of the market, chances are that by 2024-2025, the bitcoin value could celebrate the $120-140k milestone. Be aware, however, that the journey to this point may be tortuous.
Altcoin market overview
During BTC’s recent soaring, altcoins exhibited little growth, especially the top coins of the last cycle, which are still a long way from their all-time highs. It was mostly emerging coins that saw growth, unencumbered by high volume sales on the part of investors who purchased those between 2021 and 2022.
Ethereum, being the second leading cryptocurrency, is now trading at all time lows compared to bitcoin. Despite dramatic advancements in fundamentals and technology, as well as given the expanding ecosystem around Ethereum, investors are still focusing on the alpha cryptocurrency. Until such an interest drifts to altcoins, we should not anticipate much growth in this area.
The altcoin bull run could break ground in the fall of 2024. Over the past few weeks, altcoins have bounced back significantly from yearly highs, indicating that market is relatively weak at the moment and there is not even the slightest interest in acquiring them. Following Bitcoin’s halving and anticipated price correction, altcoins may also experience a steep decline and enter an accumulation phase over the upcoming summer.
What is critical to do is to keep an eye on the dynamics of the ETH/BTC trading pair. Should there be any evidence of the possible approval of spot ETFs for Ethereum in the US, it could drastically reshape the crypto market and push the start of the altcoins rise in value further into late spring or early summer of this year.
At this point, it makes sense to allocate 30-50% of your capital to altcoins to profit from a possible post-halving rally. We suggest you keep the rest of your holdings until late spring or early summer. In the event of a bitcoin correction, one should wait for altcoin prices to approach reasonable levels and strengthen you portfolio based on solid assets. Many of these can produce returns with regard to current prices of 300-500% performance in the ongoing market cycle.
Are miners expected to start selling BTCs?
There could be a major outflow of Bitcoin from miners in the months following the Bitcoin halving as in previous cycles, according to a market analyst. The overhang from this selling could last four to six months, explaining why Bitcoin might go sideways or flatline for the next few months — as it has done following past halvings.
For instance, Bitcoin value remained hovering between $9,000 and $11,500 in the five months that followed the 2020 halving.
As for this one, it will take place around April 20, just five days away, so markets may not see any significant upward trajectory until around October if history repeats itself.
Moreover, miners tend to stock up on BTC, leading to a supply/demand imbalance and a subsequent going-through-the-roof in Bitcoin prices, leading up to the halving.
Such a scenario has already played out, with BTC prices skyrocketing 74% in 2024 to reach an all-time high of $73,734 during March before bouncing back to below $63,000 mark in mid-April.
Altcoins, in particular, could bear the brunt of this situation. Many of them have been falling back heavily over the past week and many remain a long way away from their peaks in 2021.
Conclusion
Highly-anticipated Bitcoin halving in April could lead to massive shifts in market trends. Cutting rewards for miners could cause a temporary outflow of bitcoin, which could impact prices and generate extreme volatility in the crypto market.
Keep in mind historical data on previous halvings and their implications on bitcoin value. The expected period of price flatlining or its slight movement after the event in question can make for a well-grounded historical trend.
There remains potential for altcoin prices to surge over the long run, particularly in the fall of 2024, when the major growth phase is expected to set off. Nonetheless, this may depend on a number of factors, including the actions of regulators and evolving investor interest.