We’re six months away from a rare phenomenon in crypto. In fact, it’s only happened three times over the past 15 years.
It’s called the “halving.” And if history is any guide, it will ignite the price of bitcoin.
If you have yet to prepare for this event, today’s essay is for you.
That’s because a clear and predictable pattern has played out prior to each halving.
If you’re aware of this pattern, you can potentially maximize your returns as the next bull market in bitcoin kicks off.
Failure to do so could mean missing out on a 4,200% price surge that bitcoin has averaged in the two years following its past halvings.
Today, I’ll go over what the halving event is… the pattern that emerges before each one… and how you can take advantage of it.
A Supply Cut Set in Stone
When bitcoin miners validate transactions, they receive a reward of newly created bitcoin for their services.
The halving event cuts the reward miners earn in half.
Let me explain…
There can never be more than 21 million bitcoins in existence. The issuance is strictly regulated by computer code.
Each halving reduces supply coming to the market.
As supply decreases and demand remains constant or increases, basic economic principles suggest bitcoin’s price should rise – and by a lot.
The first halving occurred in 2012. The second in 2016. And the third in 2020. The fourth will occur in April 2024.
So next year, the reward miners receive will drop from 6.25 to 3.125 BTC. Over one year, that’ll drop the supply coming to the market from about 337,500 BTC to about 168,750.
This supply decrease creates disinflationary pressure on bitcoin, which fuels its price rise.
You can see that in the chart below. It shows the average price level of bitcoin before and after its previous two halvings.
The chart is formatted as an index. That means the index value on the date of the halving equals 100.
On average, bitcoin has risen by as much as 1,534% in a little over a year after the previous two halvings.
However, something interesting happens six months before the halvings.
As you can see, prior to each of halving, bitcoin experienced a sharp price drop.
It’s not clear why. Some speculate it’s driven by miners who want to lock in gains by selling their mined coins before their rewards drop.
Regardless, it’s a pattern we’ve seen play out in the run-up to each halving.
Now, I’m not suggesting a similar drop is destined to occur this time around. Past performance never guarantees future outcomes.
But it’s important to be aware of this pattern if it does end up happening again.
If we do see a double-digit-percent drop in bitcoin over the next few months, it will be an attractive buying opportunity.
In 2020, bitcoin fell by 26% five months before the halving. Two months later, it suffered another 53% drop.
If you had bought bitcoin six months before the halving, you would’ve made a solid 663% return once it reached a high of $69,000 over the following two years.
However, you could have made 1,307% – nearly double your money – if you had bought at the $4,900 lows two months before the halving.
The same thing occurred in the run-up to the second halving.
Five months before the event, bitcoin experienced a 20% drop down to $368.
If you had bought bitcoin six months before the halving, you would’ve made an incredible 4,112% return once it reached a high of $19,040 18 months later.
However, you could have made 5,074% if you had bought at the $368 lows a month later.
That’s the difference between turning $1,000 into $42,120 and $1,000 into $51,470.
Ignore the Naysayers
If the price of bitcoin drops at any point prior to the halving, you should expect the naysayers to come out in droves.
It has happened before each halving like clockwork.
The following headlines are just a few that were published within six months of the last two halvings:
“Bitcoin’s Magic Is Fading, and That’s a Good Thing” – Forbes.com
“Bitcoin Is Dead, Says Prominent Fintech Executive” – Yahoo Finance
“R.I.P. Bitcoin: It’s Time to Move On” – The Washington Post
“Death Sentence for the World’s Most Popular Cryptocurrency” – Cointelegraph
They do this because they know it will drive eyeballs and clicks to their websites.
But these negative headlines shouldn’t bother you at all because the fundamentals are on our side.
The halving will reduce the available supply of bitcoin coming to an already tight market.
That’s because bitcoin HODLers are hoarding their bitcoin. (That means “hold on for dear life.”)
These are the hardcore bitcoin believers. You’ll have to pry bitcoin from their cold, dead hands (or pay them a fat premium to get their coins).
According to data from crypto research firm Glassnode, the number of bitcoin held in wallets with minimal spending history hit a record of over 15.4 million tokens.
By some estimates, another 10% of bitcoin has been lost forever. Others put it as high as 25%.
So bitcoin will become scarcer and scarcer. Meanwhile, demand is about to explode.
The U.S. Securities and Exchange Commission (SEC) is currently reviewing several spot bitcoin exchange-traded funds (ETFs). We believe approval is imminent.
The biggest player here is BlackRock, which manages nearly $10 trillion in assets. That’s almost the same size as the entire $12 trillion gold market.
Fidelity, Invesco, Franklin Templeton, WisdomTree, and Ark Invest are all lining up to get a spot bitcoin ETF approved by the SEC too.
Combined, these Wall Street titans manage $16.2 trillion in assets.
What do you think will happen when a flood of capital hits a wall of tight supply? Something has to give.
Think about it this way…
If you knew half of the world’s incoming gold supply was going to disappear next April, what would you do?
You’d drop everything the moment you got that tip and get your hands on as much gold as possible.
The bottom line is this: The halving will happen. And bitcoin prices will explode higher.
But there’s a catalyst no one in the mainstream media is talking about that could send bitcoin prices to the moon during the next halving…
The Third Wave of Crypto Profits
If you have the means to do so, you should absolutely view any drop in bitcoin from now to the halving as a buying opportunity.
That will help increase your returns when bitcoin surges to new highs, as it’s done following each previous halving.
But there’s an even more pressing reason to position yourself now…
Although a spot bitcoin ETF will be a major boost for this asset class, it will primarily impact bitcoin, which has a market cap of about $840 billion.
But Daily editor Teeka Tiwari believes there’s a catalyst coming by the end of this year that could be orders of magnitude bigger than a spot bitcoin ETF.
According to Teeka, it will unleash a $100 trillion opportunity that he calls the Third Wave.
That’s almost four times bigger than the entire U.S. economy. So the Third Wave could be the biggest crypto trend ever.
Teeka says this new trend is set to transform everything in the markets… stocks, bonds, ETFs, mutual funds, commodities… you name it.
It could impact every single 401(k) and retirement account in the United States. And the venture that will create this $100 trillion opportunity will launch by the end of the year.
Tonight at 8 p.m. ET, Teeka will tell you what this venture is… and share details about five tokens he believes are best positioned to ride this wave.
He’ll also give you the name of a coin that could potentially 8x your money during the Third Wave… completely free of charge.
Look, as bitcoin goes, so do the altcoins. We’ve already seen them rally in tandem with bitcoin this year.
While bitcoin is up 162% this year… altcoins like THORChain, Solana, and Render are up 408%, 513%, and 800%, respectively.
So it’s important you tune in to what Teeka has to say and position yourself for the Third Wave now. It will be bigger than any ETF or halving event we’ve seen in the past.
Analyst, Palm Beach Daily