Is now a good time to buy bitcoin?
With the bitcoin halving close at hand, is now the time to invest in bitcoin? Previous instances have established a precedent for price increases; in the months following each of the three past halvings, the asset has appreciated considerably. The last halving, which occurred in May 2020, saw the cryptocurrency add $2,000 to its value in the proceeding three months. However, the reasons whybitcoin pricesrise or fall are complicated and don’t always make sense; throughout that year, the coin skyrocketed from around $7,194 to $32,810 on little news.
Experts are largely bullish in the year to come for cryptocurrency, and the context of bitcoin spot ETFs and the halving help to explain why. Martin Leinweber, digital asset product strategist at MarketVector Indexes, tells Money that the demand for bitcoin products is extremely high.“Investors had previously stated that achieving $5–$10 billion USD [in net inflows to bitcoin ETFs] in the first three months would be an unprecedented success,” he says. “Now, BlackRock [alone] is on the verge of surpassing $5 billion in assets under management within 23 trading days, placing it in the top 7% of all ETFs by size.”
Leinweber uses this example to illustrate the point that the demand for bitcoin already vastly outpaces the available supply.
“A broader range of investors are dedicating a portion of their assets to bitcoin,” he says. “Large portfolio managers are now incorporating this new asset class into their allocations.”
With this already happening, a 50% slowdown in production of new bitcoin after the halving will only further stoke demand. There are obvious expectations for price increases around the halving, but investors shouldn’t expect a guaranteed moonshot.
“Buying before the halving has risks of volatility,” says Dan Weiskopf, co-portfolio manager of ETF company Amplify’s Transformational Data Sharing ETF. Weiskopf says that the momentum already generated by the recent bitcoin ETF approvals are likely to keep carrying prices upward ahead of the halving, but he reminds investors that they should be patient and expect volatility. “[Do] not expect every day to be a straight line, up 3%-5%,” he says.