Why I’m Still Buying Bitcoin Hand Over Fist Today

Despite a strong recovery to start 2023, Bitcoin (BTC 1.50%) is still down 60% from its November 2021 record high of nearly $69,000. For most, this may be reason enough to stay away from investing in the world’s most valuable cryptocurrency – but when you look at Bitcoin’s price action during previous crypto winters , it becomes clear that it is a rare opportunity at the moment.

Simply put, Bitcoin is probably at a level with the least risk and the most upside today. The primary reason has to do with something called a halving.

Half of a half of a half

Halvings are unique to Bitcoin and hardwired into the code so that the rate at which new coins enter circulation slows roughly every four years, or every 210,000 blocks added to the blockchain.

The primary way Bitcoins are created is in the form of a reward given to miners who successfully mine the next block. Originally, the block reward was a whopping 50 Bitcoins. But after 210,000 blocks, the reward was halved to 25. As time has passed, this site has reduced to just 6.25 and sometime around May 2024, the block reward will be halved to just 3.125 Bitcoins.

Surprisingly, when we chart Bitcoin’s price and overlay the dates of all previous halvings, a clear trend begins to emerge – Bitcoin has in the past tended to bottom out when the next halving is about a year and a half away.

Because halvings are set in stone and we know that a new block is added to Bitcoin’s blockchain approximately every 10 minutes, we can estimate with near certainty that the next halving will occur sometime in May 2024. Should this cycle be as before, do today once every four years opportunity to buy Bitcoin at a significantly discounted price as the next halving is about 15 months away.

Although buying at the true December 2022 half-year would have allowed you to pay less to invest, there is still plenty of room between Bitcoin’s current price and its all-time high.

Proof of this does not require much additional work, as another pattern becomes apparent when analyzing Bitcoin’s price around halvings – it has typically reached a new all time high a year and a half after the halving. If this time is the same, November 2025 could be a date for investors to keep an eye on.

While this may sound like an incentive to time the market, it is not. Our goal is to find assets to buy and hold for the long term, and few other assets have rewarded investors with a long-term time horizon like Bitcoin. As history has shown, those who buy and hold for multiple halvings have the most to gain.

Further evidence

Whether this cycle between halvings plays out the same as the rest remains to be seen, but there is another metric that reinforces the assumption that today is still a good time to buy and minimize risk. Halvings aside, when Bitcoin loses more than 65%, it has proven to be one of the most lucrative times to buy.

In Bitcoin’s history, it has experienced several losses of more than 60%, and on three occasions it has even lost more than 80% of its value. Although hindsight is always 20/20, it was clear that those who bought Bitcoin after drastic declines like these ended up benefiting the most when prices picked up again.

As such, even with prices up nearly 70% year-to-date, Bitcoin remains well clear of its all-time high of around $69,000. With further downside appearing to be as minimal as it has been since the last time Bitcoin had a significant fall of more than 60% in December 2018, Bitcoin looks as enticing as ever at today’s levels.