A LETTER TO CRYPTOCURRENCY INVESTORS AND TRADERS. ..
INTRODUCTION
Just like investment in every other businesses, there are risk associated with investing or trading cryptocurrency. One has to make research and find out whether a cryptocurrency has a very good project under which it is developed before trying to invest or buy such cryptocurrency for keep.
Not every cryptocurrency has a bright future like Bitcoin, Ethereum and Binance Coin (BNB). Some are just there to reap investors and traders of their hard earned money. So one must take due diligence to find out about a cryptocurrency and its underlying project before investing or trading it. This is what we call fundamental analysis in the cryptocurrency world.
Aside doing fundamental analysis, one has to look at the period when he or she want to invest or trade a cryptocurrency so as to be sure that his investment do not spend so much time before it begins to yield profit. This will take us to the topic for which I made this writeup.
BITCOIN HALVING
Bitcoin halving is simply the cutting into half the reward that bitcoin miners are giving for their work. Because of the consensus algorithm upon which bitcoin is built, it is very difficult to mine the coin. For this difficulty faced by miners, they are rewarded awesomely for their work. To keep the value of Bitcoin at a steady pace, the reward of miners has been continuously slashed into two over the years.
The first time Bitcoin halving was done, it was slashed from 50BTC to 25BTC, from 25BTC, it was slashed to 12.5BC and the last halving brought the reward of miners to 6.25BTC per block. Bitcoin halving has happened three times since it started. The last one happened in May 2020. This is to say that Bitcoin halving happens every four years. The next halving is set to take place in 2024.
Bitcoin Halving is associated with a decrease in supply of Bitcoin and and increase in it's demand. This makes its price to shoot up approximately a year after the halving has taken place.
WHAT HAPPENS TO BITCOIN PRICE BEFORE BITCOIN HALVING
When the price of a commodity reduces in the market, it makes it easier for interested people to purchase it. This is one thing that happens in the crypto world. As the price of a coin begins to drop, many buyers are able to afford it and buy much quantity of it. Before halving, the price of Bitcoin will drop very low, close to the lowest price before the last halving.
WHAT HAPPENS TO BITCOIN PRICE AFTER BITCOIN HALVING
After the event of Bitcoin halving, the price of Bitcoin begins to surge upwards until it attains an ALL TIME HIGH PRICE. This price is usually higher than the price it has ever attained in the past.
This is usually the time most of the coins attain their all time high (ATH). This should tell you that Bitcoin Halving does not only affect the price of Bitcoin but also the price of other altcoins in the cryptocurrency market. Since Bitcoin has been made to exercise control over the crypto market, its behavior influences the behaviour of other coins. If you are conversant with the crypto market, you will agree with me that majority of altcoins fall when Bitcoin falls and rise when it rises.
Let us see the table below to have at a glance what I have explained so far.
| Year | Price of BTC before halving | Price of BTC after halving |
|---|---|---|
| 2012 | $12 | $1205 in 2013 |
| 2016 | $647 | $18,972 in 2017 |
| 2020 | $8,821 | $63,233 in 2021. |
After attaining these all time high in the respective years of 2013, 2017 and 2021, the price of Bitcoin fell to lower prices before they settled around the prices they were before the next events of halving took place.
WHEN IS THE BEST TIME TO INVEST IN THE CRYPTO MARKET?
Even with all that I have said so far, it's a little difficult to tell when exactly to invest in crypto assets. Nevertheless, there is a time. From the other halving event done in the past, I don't know if an announcement or news was made on the date for the halving but it is not an issue whether a news is gotten or not. One just has to be wise in this crypto market.
From previous results of halving, I can boldly say that one can invest in any crypto with good project and with prospects after a year bitcoin drop from its all time high. So before the next halving event, now is a good time to either trade or invest in Bitcoin or altcoins (ETH, BNB, XRP, MATIC, SHIBA INU, etc.)
On another thought, I think the price of Bitcoin may drop to $12K, $13K or $14K in 2023.
Nothing goes bad if you wish you wish to invest now because in 2025, the price of Bitcoin will be above $70k.
If you are looking at an investment plan of 2-3 years on cryptocurrency assets, now is the time. Believe you me, you won't regret coming across this.
You may split the money you want to invest with. Invest with some now and watch the market until March or April next year for the investment of the rest.
Note: This is an investment advice I am 100% sure of.
Don't be scared, take the bold step.