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Gate.io Blog When BTC is halved, where is the best safe haven?

When BTC is halved, where is the best safe haven?

07 December 13:39


TL;DR

- At the time of writing, over 19.1 million BTC has been successfully mined.
- The anticipated 4th Bitcoin halving scheduled for 2024.
- The progress toward the next Bitcoin halving is over 64% complete at 135 603 blocks.
- PlanB has further strengthened the claims that Bitcoin will follow the same upward pattern as the last three halvings.
- Bitcoin is already at the blue zone, “Bearish run at the counter,” of the Bitcoin rainbow chart indicator.
- Investors will run to exchange with long-term security reputation & transparent reserve proof in the next halving.


The Crypto market anticipates the 4th Bitcoin halving

The Bitcoin halving has been a crucial event in the cryptocurrency market since 2012. The Bitcoin halving is defined by a 50% slash in the mining reward for every 210 000 blocks added to the blockchain.
The Bitcoin blockchain uses a proof-of-work mechanism for validation transactions on the network. This validation work is carried out by miners, who are therefore rewarded for every block they complete. When the network was launched, miners were rewarded with 50 Bitcoins until the first halving took place at block 210 000.

This first Bitcoin halving took palace in 2012, resulting in a 25 bitcoins per block reward for miners. Consequently followed by 12.5 BTC in 2016, 6.25 BTC in 2020, and now the anticipated 4th Bitcoin halving scheduled for 2024.

The event has been welcomed with so many uncertainties and market speculations since its inception. This is due to the perceived and observed impact of the event. The prime of them all is that Bitcoin halving is meant to create scarcity and slow down the rate at which the fixed overall supply of Bitcoin, 21 million, enters into circulation.
At the time of writing, over 19.1 million BTC has been successfully mined.

Source: CFI


Accelerated Hasrate predicts Bitcoin halving might arrive earlier than 2024.

The progress toward the next Bitcoin halving is over 64% complete at 135 603 blocks. At an average of 140 blocks generated per day & 10 minutes per block, the next halving will occur in 531 days. However, in recent times, the computational effort or mining difficulty is teetering on historical highs, and some experts are predicting an accelerated Bitcoin halving schedule to Q4 2023.
Although several factors, such as technology improvement & miners' population, can impact the 10 minutes per block processing rate, the Bitcoin Algorithm adjusts the difficulty level to maintain this rhythm every 2 016 blocks. Hence the recent prediction might be wrong because Bitcoin Algorithm balances up the effect of the current elevated hashrate.


Previous Post-Bitcoin halving rallies Spells Pump in 2024

The first three Bitcoin halvings leave an undeniable footprint that suggests that the forthcoming halving might lead to another upward rally.
The previous Bitcoin Halving Footprints.

Pantera Capital

2012 Bitcoin halving: the 2012 Bitcoin halving was the first in Bitcoin history, and it took place after 210 000 blocks were completed. Before the event, the reward per block for miners was at 50BTC afterward; it became 25 BTC per block. Bitcoin market value was $12.35 at the first halving & analysis showed an upward ride to $127.00 within 150 days and then $1,207 by November 28, 2013.

2016 Bitcoin halving: the second halving took place in 2016. After the event, the new reward per block became 12.5 BTC, and the market value of 1 BTC rode from $650.63 to $758.81 in about 150 days. As of Dec. 17, 2017, the price of Bitcoin has soared to $19,402.

2020 Bitcoin halving: in May 2020, the third halving took place at block 630, 000 with a new 6.25 BTC reward per block. The price of BTC after the event rose from $8821.42 to $10,943.00 within 150 days. The price of Bitcoin ultimately rallied by 679%(68,300 in April 2021).


Stock-to-flow price projections show that Bitcoin might hit over $100k.


Apart from the common knowledge of the trend that precedes the halving events, analysts like PlanB have further strengthened the claims that Bitcoin will follow the same upward pattern. The analyst created and used the stock-to-flow model to predict a future price of over $100k confidently.

Since the third halving, the stock-to-flow (S2F) model has been widely recommended as it uses scarcity to measure Bitcoin’s value & its future price.

PlanB-“Yes macro, inflation, war ... but the next #Bitcoin halving is coming, and IMO it will (again) pump BTC.”


The Bitcoin rainbow chart uses a logarithmic growth curve to predict the potential future price of Bitcoin. At the time of writing, the price of BTC is currently ranging in the blue zone, which indicates a “Bearish run at the counter.” By implication, BTC is already oversold, which means a potential buy position.
However, this does not mean the current price of BTC is at the lowest possible range; cumulative buys or dollar-cost-averaging strategy at the current range might be very profitable in the long run.


Where is the best safe haven when Bitcoin is Halved?

In 2022, several exchanges have suffered major hits starting from the tragic Terra(Luna) crash to the recent FTX liquidity crunch. In all cases, we have seen a ripple effect of bankruptcy, exchange collapse, and investors losing their funds. However, investors are turning to exchanges with long-term best practices in Risk management; this will be the most important need as Bitcoin's fourth halving may come with its turbulence.

As mentioned earlier, Bitcoin halving events are often characterized by speculations, high volatility, and uncertainties. And cryptocurrency holders must have a strategic plan to safeguard themselves from negative aftermaths. One of the things to consider following the recent FTX Domino effect is that where you store your asset is crucial to its safety. It has been revealed that some crypto exchanges do not properly manage their risks and debts or handle customer funds carefully, as promised. This makes them highly prone to market turbulence. But exchanges that utilize the Merkel Tree proof-of-reserve, like Gate.io, offer high-level transparency, and you can trust that your deposits are in safe hands.

In 2020, Gate.io became the first crypto exchange to successfully offer a user-verifiable, immutable Merkel tree 100% proof of reserves (PoR) audit. With the above guarantee, users can confidently store their assets without fear of losing them.

If you are storing on an exchange like gate.io, another thing to consider when BTC is halved is subscribing to a wealth management or investment plan that helps you hedge against market volatility. This includes the Gate.io structured products, auto-investment, and crypto lending.

Alternatively, using self-custody wallets is another safe haven when Bitcoin is halved. When you store your assets in exchanges, you cannot access the private keys or seed phrases. With self-custody wallets, you can have full custody of your assets, and they are protected as long as you keep your private keys safe. This way, the management of user funds is entirely their responsibility. The only drawdown of this approach is that this method is that users stand the chance of losing their assets if they disclose or lose their key.


Conclusion

In the last three halvings, Bitcoin has shown a consistent bullish run. However, the volatility of the assets does not permit a linear growth; there are corresponding retracements following the event hype. The scarcity that characterizes Bitcoin halving is a cardinal feature that impacts the need for enthusiasts to store the asset, and then a surge follows. Since the market is at its lowest since 2020, cumulative buys or dollar-cost-averaging strategy over time is a great plan.



Author - M. Olatunji, Gate.io Researcher
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted, provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.
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