Halving is a pre-programmed event in the Bitcoin network where the reward for newly issued BTC is reduced by 50%. This is a core mechanism to limit the total issuance of Bitcoin to 21 million, occurring approximately every 4 years (next halving expected: April 2028).
1. Core Principles of Halving
- Reduced Mining Rewards: The BTC reward miners receive when creating a block is halved (e.g., 6.25 BTC in 2020 → 3.125 BTC in 2024).
- Inflation Control: Reducing the new supply lowers the inflation rate (e.g., from 1.8% to 0.9% annually), strengthening its function as a long-term store of value.
- Impact on Market Sentiment: Increased scarcity expectations drive increased demand from investors.
2. Historical Halvings and Price Fluctuations
| Halving Date | Price Change within 1 Year After Halving | Key Features |
|---|
| November 2012 | $12 → $1,100 (9,000%↑) | First halving, attention from early investors |
| July 2016 | $650 → $2,500 (284%↑) | Institutional investment begins in earnest |
| May 2020 | $8,700 → $64,000 (635%↑) | Pandemic liquidity + increased institutional buying |
📌 Caution: Short-term corrections are possible immediately after the halving (e.g., a 30% drop after the 2016 halving).
3. Investment Strategies for Halving
3-1. Long-term Holder Strategy
- "Buy and Hold": Focus on the price increase cycle 12-18 months after the halving.
- Example: Record high achieved in November 2021 after the 2020 halving.
- DCA (Dollar-Cost Averaging): Diversify volatility risk by purchasing a fixed amount monthly/quarterly.
3-2. Short-term Trader Strategy
- Pre-Halving Rally: Accumulate purchases from 6 months before the halving → Sell at high points before the event.
- Leveraging Volatility:
- Sell options with high IV (Implied Volatility) → Maximize premium income.
- Utilize breakout of support lines (e.g., 200-day moving average) as a buy signal.
- Mining Company Stocks: MARA, RIOT, etc. → Profitability increases explosively when BTC price rises.
- BTC Futures ETF: Utilize short-term leverage or hedging strategies.
- Altcoins: Potential benefits for Bitcoin substitutes like LTC, BCH during a halving rally.
4. Essential Risk Management Factors
- Past ≠ Future: The 2024 halving will be affected by different macro environments (interest rates, regulations, etc.) than previous cycles.
- Miner Selling Pressure: Increased BTC selling by miners due to reduced rewards → Potential for short-term declines.
- Market Efficiency: The impact of the halving may already be priced in (EMH assumption).
5. Practical Checklist
- 3-6 Months Before Halving: Increase BTC holdings to over 50% of the portfolio.
- 1 Month Immediately After Halving: Set stop-loss (15-20%) in preparation for increased volatility.
- 1 Year After Halving: Gradually take profits when target return is achieved (e.g., sell 50%).
6. Conclusion: Halving is Just a "Trigger"
Halving strengthens the technical scarcity of BTC but does not determine the price alone. A comprehensive analysis of macroeconomic trends (interest rates, liquidity), institutional capital inflows (Grayscale, BlackRock), and regulatory changes is necessary. The key is to find the accurate synchronization of the "halving cycle + market cycle".