With the fourth Bitcoin (BTC) halving in the rearview mirrors, new and existing investors wanting to build or increase their crypto portfolio might ask if they’ve waited too long to invest — especially now that Bitcoin has recently reached all-time highs.
On the other hand, those who have HODLed — or “held on for dear life” — might be fretting about the lack of an immediate, dramatic change in price over the past weekend.
“Some analysts predicted that the halving would trigger an immediate price slump, which would lead to widespread ‘panic selling,’ but this hasn’t happened yet,” says Easy Crypto CEO and co-founder Janine Grainger, whose company has experienced two BTC halvings.
Regarding what is next, there can be a lot of analysis around any retracements (minor pullbacks or changes in the direction of a financial instrument in terms of price). These retracements are often temporary and do not necessarily indicate a shift in the larger trend.
“In the past, halvings have been followed by periods of increased demand and price surges due to the dynamics of supply-demand, but this is never immediate, and market dynamics, sentiment, and regulatory factors all influence Bitcoin’s price trajectory, making a straight-line ascent unlikely,” Grainger adds.
While analysts anticipate an upward trend (which has been the case historically post-halving), the reality is nuanced. These events are often followed by periods of consolidation and correction — including rallies, reactions, and a lot of volatility on the way up.
The Unpredictability That Drives Decision-Making
As the immediate price slump has yet to occur, prices are currently buoyant (increasing by 9%), and investor morale has also remained buoyant. There was no immediate sell-off.
Things, however, often change quickly in crypto, and the underwhelming can lead to panicking when pricing drops. In particular, “newbies” recently invested in Bitcoin ETFs might not be used to the asset class’s volatility. When pullbacks occur, they could return to more traditional and predictable vehicles. These knee-jerk reactions could still lead to a sell-off despite a “moment in time” approach being a dangerous investment decision process.
“We might not have seen an immediate slump, but this doesn’t mean we shouldn’t be prepared for one with a sound investment strategy to boot,” says Grainger.
Taking a Broader View on Volatility
The recent halving of Bitcoin block rewards is foundational to Bitcoin’s well-known four-year cycle. This cycle has been historically closely linked to price, progressing through “bull” (rising prices), “bear” (falling prices), “accumulation” (a leveling out of prices), and “expansion” (steady growth) phases. Understanding this cycle is rudimentary to taking a much broader view of volatility.
Given the crypto market’s volatility, investors can employ dollar cost averaging (DCA) strategies, where they regularly invest fixed amounts regardless of market conditions to average costs and reduce risk. Also, the hold-on-for-dear-life (HODL) strategy, where they hold onto assets long-term despite market fluctuations — focuses on fundamentals rather than short-term movements. Diversification is another strategy where investors spread their investments across different assets (such as types of coins) to minimize risk from volatile market swings.
Investors should expect price slumps after a Bitcoin halving, but while they don’t happen yet, they still have time to consider strategies. As Grainger says, “Time in the market beats timing the market.”
