Exploring Bitcoin Halving 2024: Strategies and Market Impact

Exploring Bitcoin Halving 2024

Hello everyone. Today we will delve deeply into the strategies and effects of the 2024 Bitcoin halving event. If you enjoy today’s content, be sure to save and share, and your valued opinions in the comments section are welcomed too. Now, let’s get straight to the point.

Strategies and Impact of the Bitcoin Halving Event

Our topic of discussion today is the upcoming Bitcoin halving in 2024. What kind of correct strategies and approaches should we adopt for this significant event? Today’s article will be divided into two main parts. In the first part, we will explore how the market will usher in the next bull run when liquidity returns. In the second part, we discuss a common misconception in the market: “stories create price action,” while in reality, it should be “price action creates stories.”

The Relationship Between Liquidity and Bull Markets

First, let’s talk about liquidity. You may wonder why I previously said the bull market has started, but now I am suggesting we need to wait for liquidity to return before the real bull market kicks off. The keyword here is “major bull market.” Observing Bitcoin’s current trajectory, it certainly has gained considerably. Since last November, Bitcoin has entered a bullish phase, climbing sixty to seventy percent over the past 8 to 9 months, reflecting an upward trend. However, such increases do not define a real major bull market.

So, what is a true major bull market? It should be those market phases marked by significant, attention-grabbing rallies. And when will the real major bull market officially start? The key lies in the return of liquidity. If the Fed continues to raise interest rates, or even if the hikes stop but we remain in a high-interest environment, liquidity will not improve. Only once the Fed begins cutting rates and printing money extensively, will liquidity return to the market and we will witness the scale of the bull markets from previous Bitcoin cycles.

Price Action and Market Stories

Next, let’s discuss the second part: “price action creates stories.” In the investment market, many rely on news and stories to make investment decisions, but what I want to tell you is that news and stories do not directly affect the price trajectory of assets. This point is proven by recent months’ news, such as XRP’s victory in the SEC lawsuit, which did not bring a long-term upward trend to the market. In fact, price movements in the investment market do not follow stories but rather, stories follow price movements. Whenever there is a price plummet, someone weaves a story why it crashed; when prices soar, there’s always a reason, like an event causing the rise. But the reality is that these stories often emerge after the price increase. Most investors, especially those who are losing money, mistakenly believe that market trends are driven by stories and events, but in fact, it is just the opposite.

Bitcoin Halving Pre-Event Trends Prediction

Lastly, I want to add some of my own predictions about the trend before the Bitcoin halving. I believe this is of utmost interest to everyone. Personally, how would I face the event of Bitcoin halving and what are my thoughts on its impact on price movements? From the chart, we can see that the halving will occur around April 2024. So, how will prices change at the moment of halving? My personal guess is that since no one can accurately predict the market direction, I won’t know how the price will change in the future. But I will be prepared for possible situations. I don’t think Bitcoin will fluctuate wildly during the halving, whether it plummets or skyrockets. I reckon there are only two possibilities for Bitcoin in the coming year. One possibility is that it will start rising well before the halving, with my personal guess being the rise beginning in the fourth quarter of this year. The other possibility is that it will start rising a few months after the halving, which would be between August and October next year.

Sensible Investment Strategies

If you ask me how to prepare, I have consistently been telling everyone in my column to maintain a level of cash liquidity, because that allows us to face the different market trends. If Bitcoin rises ahead of the halving, then most of us should already have a very healthy Bitcoin position by now. If the price starts rising before the halving, you have already enjoyed that surge. But if prices drop, then you will need enough cash to adjust your position. If it’s the second situation, rising only a few months after the halving, then congratulations, you will have more time to DCA (Dollar-Cost Averaging) at lower positions. After all, opportunities in the investment market are always reserved for those who are prepared. And we are not necessarily competing on who makes more money in a short period but rather on who stays in the market longer. Hence, we need to have patience and gradually become wealthier in the investment market.

Latest Developments in the Cryptocurrency Industry

Now let’s look at the latest news. The first news is about Cathie Wood of ARK, who has applied to prepare for launching the first-ever US-based spot Tether ETF. I am not surprised by this because we all know Wood has been very optimistic about Bitcoin and Ethereum. This ETF will be administered by Coinbase Custody Trust Company, which will store these assets in Coinbase’s dedicated institutional custodian service. We can see the close relationship between Coinbase and various ETFs and syndicates.

The Impact of Regulation on Cryptocurrencies

The next topic is FASB. I’ve already discussed Michael Saylor and fair value accounting with everyone yesterday. Today’s report is a day late by comparison. In yesterday’s article, I already explained the significance of this matter. It essentially opens up avenues for major institutions to hold Bitcoin. If institutions can enhance corporate valuations through Bitcoin holdings and its value appreciation, it would be highly advantageous for large institutions or any publicly-traded company. With this bill, more companies would prefer holding Bitcoin rather than cash.

Significance of Bitcoin Spot Trading Volume

Another signal is the record low of Bitcoin spot trading volume, the lowest in nearly four and a half years. This is perplexing, especially under the auspice of positive news like the XRP victory over the SEC and Grayscale winning their lawsuit. Why would spot volume touch the lowest point in four and a half years? If we think more deeply, spot trading is usually done by retail investors. This means that the interest of retail investors in cryptocurrencies is at an all-time low. Meanwhile, big institutions and large funds, the so-called smart money, transact through derivatives instead of buying spot. This clearly shows that smart money is positioning itself in Bitcoin and cryptocurrencies while retail investors seem lackluster. This data is yet another testament as to why most retail investors tend to lose money in investments. So, this news is actually very good for the Bitcoin and cryptocurrency market.

The Future of Blockchain Technology and Artificial Intelligence

In the next issue, I will discuss how blockchain technology and artificial intelligence may change the future financial market. Trading on Wall Street is mostly done by robots, not humans. This is why the trading market is so challenging. Over the past few years, we have seen humans unable to defeat AI in competitive areas like chess. Trading is no exception. Even if you are an outstanding trader, humans are emotional beings and can occasionally be swayed by emotions. On the contrary, robots are not influenced by emotions; they only do what they think is right. Therefore, in the upcoming years, AI and blockchain technology will be the two most developed industries. If so, the trading market will ultimately become a battlefield of AI vs. AI.

Cryptocurrency Taxation and Regulation

Lastly, the IRS is setting up a separate division to tax cryptocurrency. The IRS requires everyone to record gains and losses when trading cryptocurrencies and demands all crypto exchanges to supply customer transaction information, including records of transferring cryptocurrencies to personal wallets. Some might see this as bad news, concerned about being taxed on future earnings. However, I consider it a form of recognition for cryptocurrencies. Previously, the IRS largely ignored the crypto sector, and tax forms only had an option indicating whether one held cryptocurrencies. If the IRS is establishing a department specifically for cryptocurrency, then it can be said that the IRS has effectively recognized cryptocurrency as an asset class. Personally, I believe taxes should be paid on investment profits, although the tax rate is a bit high (30%), with long-term capital gains tax around 20%. So, the point where the IRS recognizes cryptocurrency as an investment object, I think, is good news for cryptocurrencies rather than bad news.

The Impact of Taiwan’s Cryptocurrency Regulations

The last bit of news is that Taiwan is about to introduce some regulations concerning cryptocurrencies. These regulations are mainly aimed at crypto exchanges, and Taiwan’s Financial Supervisory Commission has set up ten standards requiring exchanges to perform rigorous review when listing or delisting coins, keeping exchange assets and client assets wholly separate, and reporting to the commission. While regulation has its pros and cons, with some thinking cryptocurrency should always be decentralized, I personally believe that regulation, in general, is good for the entire cryptocurrency industry. When regulatory bodies start to regulate the cryptocurrency industry, it means they have acknowledged cryptocurrencies as a category of assets. I am curious about how you all view regulation: do you wish for cryptocurrencies to remain decentralized, used only by select few, or do you hope that government agencies provide some regulatory framework to protect new market entrants and thus promote the globalization of cryptocurrencies? Feel free to share your opinion in the comments section.

That’s all for today’s sharing, and I hope this article makes for a pleasant weekend for you. If you like today’s article, don’t forget to like, save, and turn on notifications. See you next week, goodbye!