Bitcoin will be disrupted! What is a winning strategy for halving?


Sun 24 Mar 2024 ▪ 4 min reading ▪ by Eddy S.

The world of cryptocurrencies is constantly evolving. Major changes happen regularly. Recently, Glassnode's analysis has raised concerns. Bitcoin could experience a period of significant volatility. This would be due to the halving effect of new bitcoin issuance. Faced with these frequent upheavals, wouldn't it be better to prepare for any turnaround in the crypto world?

Bitcoin ETF Halving

Market reduction versus ETF demand

Traditionally, bitcoin halving created disruption. First, it caused a shortage in the issuance of new units. This artificial scarcity often led to an increase in volatility and an imbalance between the now reduced supply and the existing demand. The new bitcoins then lost their power to bring liquidity to the market. In addition, this halving mechanism prevented miners from making significant profits.

However, a new factor could shake up this usual dynamic. This is the growing demand coming from Bitcoin ETFs, these exchange traded funds are now absorbing more bitcoin than miners are producing. This strong institutional demand could offset the impact of the reduction in supply. Investors via ETFs are massively repurchasing available bitcoin. Their appetite seems insatiable at the moment but this massive accumulation would already reduce the available supply. The scarcity effect anticipated with halving could therefore be largely attenuated.

The risk of a massive crash after the Bitcoin halving

Despite this new situation, the next halving could cause violent tremors. A scenario feared by analysts would be that of “buy the rumor, sell the news”. Before the event, a speculative bubble could form and investors would accumulate bitcoins in anticipation. But once the halving is effective, a massive withdrawal of institutional capital could cause a crash. If Bitcoin ETFs begin to sell off, it would create immense selling pressure that would quickly collapse prices.

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Prepare for all eventualities

Faced with these threats of tsunamis on the markets, preparation becomes essential. Informed investors are already reviewing their strategies in depth, diversifying their exposures and strengthening their liquidity to cope with the shock. Some seasoned traders also plan aggressive short selling strategies. They hope to take advantage of a possible collapse to reposition themselves at a good price. But, this bet remains very risky in the event of a rapid rebound.

In all cases, a very cautious and defensive attitude seems to be necessary when approaching halving: betting on volatility by opting for positions with little exposure. The watchword is to avoid at all costs being caught off guard by the predicted tsunami. Finally, we should follow the activity of Bitcoin ETFs with great attention because their massive purchases and sales could be the triggers or dampers of the next upheavals. Remaining highly responsive and adapting as they move will best navigate the coming storm.

In short, the crypto world is entering an uncertain era. This era where the next Bitcoin halving, combined with the massive influence of ETFs, could completely redistribute the cards, making old winning strategies obsolete. Faced with this predicted hurricane, caution and mental agility will be essential. Only those who know how to adapt quickly to this new environment will succeed in doing well; the others risk being swept away by the coming tsunami.

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Eddie S. avatarEddie S. avatar
Eddy S.

The world is evolving and adaptation is the best weapon to survive in this undulating universe. Basically a crypto community manager, I am interested in everything directly or indirectly related to blockchain and its derivatives. In order to share my experience and raise awareness of a field that fascinates me, there is nothing better than writing articles that are informative and relaxed at the same time.

DISCLAIMER

The comments and opinions expressed in this article are those of the author alone, and should not be considered investment advice. Do your own research before making any investment decisions.

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