Author: Max Kalmykov, CEO Bitsgap
The Bitcoin halving is a pre-programmed event in Bitcoin’s protocol that cuts the reward for mining new Bitcoin blocks by half. This is encoded into Bitcoin's code to progressively decrease the rate at which new Bitcoins are created every four years — with the next one just around the corner.
The expected decrease in new Bitcoin supply often prompts speculative trading, as historical patterns show massive price swings before and after past halvings.
Understanding these coded-in cycles is crucial for anyone holding crypto, given the substantial spillover into overall market sentiment.
Let’s explore potential repercussions across altcoins and explore strategies to capitalize on the resulting opportunities through automated trading.
Halving’s impact on altcoins
The Bitcoin halving event is a prominent factor that holds considerable sway over altcoin performance. This abrupt throttling of new BTC supply typically propels Bitcoin's value upward, setting off a cascade that impacts other cryptocurrencies. Thus, past halvings brought bullish mania, with major assets pumping to new highs post-event.
If history repeats itself, Bitcoin's looming halving may stoke scorching market rallies, with investors already front-running their buying ahead of the predictable supply squeeze and further intensifying FOMO market mania. If Bitcoin continues on its upward trajectory post-halving, investor confidence will undoubtedly expand across the whole market. After securing BTC profits, attention and capital will shift to undervalued altcoins. With cash reining in, this spill-over effect stands to catapult major assets as well as promising upstarts if momentum sustains.
But what if, this time, history doesn't rhyme? Some sceptics argue, "this time it's different". Valid doubts linger about whether the halving can fuel further parabolic runs in a maturing market. Other factors may dampen or intensify the impact. If the halving is already factored into the price of Bitcoin due to traders purchasing Bitcoin in anticipation, we might not see the dramatic price increase expected. Come the event, traders may sell BTC to realize gains instead of hold in anticipation of further upside. Profit-taking could cascade into declines rather than continued vertical ascension. And if Bitcoin falters, overall sentiment suffers, spawning a sell-off stampede away from crypto across assets.
Additionally, if the mining rewards reduction makes mining less profitable, there could be a decrease in network security and mining activity, leading to concerns over the robustness of the Bitcoin network and, by extension, the broader crypto ecosystem.
However, sentiment currently seems bullish rather than bearish. Several prominent figures even foresee Bitcoin valuations rocketing past $100k — and beyond. Of course, no one can time markets perfectly or predict the future with certainty. Yet if current momentum sustains, Bitcoin’s next halving chapter could write crypto history rather than consign assets to winter.
Using automations on altcoins amidst halving volatility
No matter the state of the market, savvy traders can always find ways to make money. By using automation tools, you can take advantage of altcoin price changes, whether the market is going up or down.
For instance, in a bullish scenario, you can program trading bots to automatically execute buy orders for altcoins when certain bullish signals are met, like breaking past resistance levels or a golden cross on moving averages. Bots with trailing features, such as Bitsgap, can lock in maximum profits during uptrends by automatically adjusting sell orders alongside price shifts. Rebalancing bots are also useful for maintaining a desired asset allocation across multiple altcoins. If some altcoins outperform others, the bot will automatically sell some of the winners and buy more of the laggards to keep the portfolio in balance.
In bearish conditions, you can preset stop-loss orders through automated platforms to minimize losses if the market turns downward post-halving. You can also short sell altcoins, borrowing then selling at current highs before repurchasing later at lower prices. Then, dollar-cost averaging bots can help to steadily accumulate altcoins at regular intervals, potentially lowering the average entry price for profitability when the market rebounds. Similarly, BTD bots like Bitsgap buy dips and accumulate base currency during downtrends in anticipation of an eventual upside bounce — a solid strategy since quality altcoins tend to recover.
In both scenarios, automation aids in sticking to predefined strategies without emotions driving detrimental decisions — a common downfall when volatility intensifies around major events. However, flexibility is just as important: markets move in unexpected ways, so successful traders adjust their tools and approaches accordingly over time. Of course, caution remains essential — only invest what you can afford to lose and DYOR.
Conclusions
The truth is — no one knows exactly where Bitcoin's and altcoins’ prices head post-halving. Past patterns suggest upside, but macro winds can suddenly shift course. While volatility likely persists short-term, impacts on miner economics, regulatory moves, and global finance inject unpredictability. Bitcoin often lifts markets, but gravity remains a danger if momentum falters. Still, opportunity hides in uncertainty — there are always opportunities for profit, considering the automation tools available today. So do your own research, map plans for both bulls and bears, automate to avoid reactionary moves, and stick to it.
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