Pre-Halving Bitcoin Dip: Historical Support and Reasons to Buy

Rekt Capital predicts that Bitcoin (BTC), the foremost cryptocurrency by market cap, could surge after halting mining rewards in April 2024. This projection is based on historical trends around BTC’s performance before and after mining reward halvings, as noted by the crypto analyst.

The analyst suggests an opportunity for assertive traders to capitalize on Bitcoin retracements, strategically reinforcing their positions during dips for potentially higher returns in the coming months.

Bitcoin is currently trading above $37,000, maintaining an upward trend after substantial gains in recent trading weeks. It has surpassed key levels such as the psychological $30,000 and $32,000, reaching new highs for 2023 in July.

Bitcoin price trending upwards on the daily chart | Source: BTCUSDT on Binance, TradingView

The surge in demand can be attributed to various factors, including the anticipated approval of the first spot Bitcoin Exchange-Traded Fund (ETF) in the United States and the upcoming halving event in early 2024. This event is expected to increase Bitcoin’s scarcity as the coin’s inflation continues to decrease.

Pre-Halving Price Dynamics

Rekt Capital highlights that approximately five months before a halving event, anticipation and speculation set in. During this period, investors often take advantage of lower Bitcoin prices as the supply of new coins is expected to decrease. This increased buying activity contributes to price surges, providing an attractive entry point for long-term investors. Notably, both the 2016 and 2020 pre-halving periods saw substantial price increases.

BTC price action before halving | Source: Rekt Capital on X

As the halving approaches, there is typically a pre-halving rally occurring about two months before the event. Investors, driven by excitement and anticipation, tend to “Buy the Hype” in anticipation of a post-halving price surge. However, this surge is often short-lived, with investors adopting a “Sell the News” approach once the halving takes place, resulting in a temporary price decline.

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According to the analyst, the retracement following the halving is typically in double digits but has decreased in severity during each halving stage over the years. Despite corrections, investors tend to accumulate Bitcoin for months post-halving before prices experience a breakout, leading to a parabolic rise.

It’s crucial to note that this analysis is grounded in historical events and does not account for the evolving liquidity of Bitcoin or the regulatory landscape of the crypto market. Nonetheless, market participants remain optimistic, influenced by the improving regulatory environment surrounding Bitcoin.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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