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CN Recently, Bitcoin has experienced another rise, and even exceeded $52,000 at one point, setting a new high in more than two years. Its market capitalization also exceeded $1 trillion for the first time since late 2021. Due to its rapid growth, many investors have the opportunity to earn handsome profits. As a result, the Bitcoin market has become a gold mine for institutional and private investors, each trying to develop unique investment strategies in order to profit from price fluctuations.
This article will provide some of the best Bitcoin investment strategies to help every cryptocurrency investor seize the opportunity to make money.
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U.S. Bitcoin ETF drives price higher
Bitcoin prices are enjoying their longest rally in a year, driven by a U.S.-approved spot Bitcoin exchange-traded fund (ETF). Bitcoin prices have been climbing higher, breaking through the key resistance level of $50,000 on Monday to reach their highest level in two years, data shows, marking the achievement of a major milestone. According to data, the price of Bitcoin once touched $50,369 and is currently quoted at $49,514. According to Bloomberg data, if the rally continues, Bitcoin will usher in its seventh consecutive trading day of gains, which will be the longest upward trend since January 2023. Analysts pointed out that Bitcoin is expected to continue to rise, supported by multiple positive factors.
On January 11, nine new Bitcoin spot exchange-traded funds (ETFs) were listed in the United States, attracting more than $9 billion in investment capital inflows. Analysts pointed to two ETFs launched by BlackRock and Fidelity Investments as the most successful a month after going public.
Caroline Bowler, CEO of cryptocurrency trading platform BTC Markets Pty, observed that institutional funds are increasingly pouring into the Bitcoin market.
Bitcoin halving cycle is coming, this is an important time
Bitcoin has now exceeded the $51,000 mark and continues to hit new highs since December 2021. As the Bitcoin halving event in April this year gets closer and closer, and the launch of Bitcoin spot ETFs, it is widely expected that Bitcoin prices will continue to be highly volatile. Since the birth of Bitcoin in 2009, it has experienced three halving events. Based on the latest mining rate changes, the outside world currently expects the fourth halving event to be triggered at the end of April 2024. Since the Bitcoin halving means a reduction in supply, Bitcoin, as well as altcoin prices will increase.
Demand for Bitcoin has increased due to the launch of a Bitcoin spot ETF in the United States. Over the past month, outflows from Grayscale’s Bitcoin ETF (GBTC) have decreased significantly.
James Butterfill, head of research at CoinShares, noted: “Yesterday, we saw $651 million in inflows, which was the largest single-day inflow since the issuance. Additionally, the issuer requested 12,000 Bitcoin yesterday, while only producing 12,000 Bitcoin per day. 900. Investors are starting to realize that demand is starting to exceed the supply of new issues.”
Data from CryptoQuant shows that approximately $9.5 billion in new money has been poured into the Bitcoin market through these funds since trading began on January 11. Over the past two weeks, more than 71% of new funds invested in Bitcoin came from spot ETFs (excluding GBTC).
Ethereum last traded 5% higher at $2,758.65 after hitting its May 2022 high earlier.
Bitcoin's surge has pushed related stocks higher. Marathon Digital (MARA-US), miners Riot Platforms (RIOT-US), Microstrategy (MSTR-US), and CleanSpark (CLSK-US) all rose by more than 10%.
Bitcoin has gained 157% in 2023 as expectations grow that the U.S. Securities and Exchange Commission (SEC) will finally approve a Bitcoin exchange-traded fund (ETF) in January this year. After the ETF is approved, Bitcoin is expected to see more positive news, although there is the possibility of a short-term decline.
Investors are waiting for the Bitcoin halving event to happen
Halving refers to an event that occurs every 4 years in Bitcoin. According to Bitcoin regulations, a block halving event will occur every 210,000 blocks. This regulation is mainly to control inflation and increase the scarcity and controllable supply of Bitcoin.
When the halving event occurs, miners need to put in the same effort, but the number of Bitcoins received is reduced by 50%. The purpose of a halving event is to align supply and demand: supply decreases, demand increases, and therefore the value of each Bitcoin typically increases.
Many predict that the next halving event will occur in April 2024. Historically, Bitcoin prices typically reach new all-time highs in the months following a Bitcoin halving.
Since 2009, three Bitcoin halving events have occurred. The first halving occurred on November 28, 2012, when Bitcoin was worth approximately $11. Subsequently, within a year, the price of Bitcoin surged to over $1,000, an increase of 80 times.
The second halving occurred on July 9, 2016, and the price of Bitcoin increased sharply again. The third halving event occurred on May 11, 2020. Due to the short-term devaluation of Bitcoin caused by the new crown epidemic, the price of Bitcoin did not rise immediately. However, in July 2020, the Bitcoin price rose above $12,000. As of November 10, 2021, Bitcoin has set a historical record of $68,982.
How to prepare for the Bitcoin halving?
The Bitcoin halving is right around the corner, and whether you're a newbie or an experienced trader, you may want to understand all the technical and fundamental elements to better prepare. In fact, the most important preparation strategy is to buy some Bitcoin (BTC) 😂.
You can start tracking price lows and buy Bitcoin when the time is right. Alternatively, you could rely on a Fixed Period Investment (DCA) strategy, buying Bitcoin periodically in hopes of achieving better dollar-cost averaging when the price of Bitcoin surges. But you may ask, why buy now?
Since the halving is expected to reduce the supply of Bitcoin, demand is likely to increase. This is the rationale behind the “Buy and Hold Bitcoin” strategy. While there are many exchanges and platforms to choose from to buy and hold Bitcoin, you may want to consider choosing a centralized exchange (CEX) for a seamless trading experience.
After buying Bitcoin, the trick to prepare for the halving is to HOLD it for at least one year after the halving occurs😂. No joking. At that time, you should be grateful for this article you read today.
Key Bitcoin Metrics and Related Price Movements
It is necessary to observe the price trend of Bitcoin before and after the halving event. However, pairing them with some Bitcoin-specific indicators can paint a picture of the market as a whole. By adding indicators to our analysis, we can understand the logic behind price increases and fluctuations related to Bitcoin supply, social sentiment, miner conditions, investor reactions to trading Bitcoin derivatives, and more.
So let's start checking the indicators:
reaction to halving
The Bitcoin halving will reduce miner rewards, directly affecting the supply of new Bitcoins. Therefore, we can expect inventory liquidity indicators to increase significantly and new supply planned for each year to be suppressed. It is important to note that the total supply of Bitcoin will not change and will still be 21 million Bitcoins (BTC). However, the halving will reduce the number of Bitcoins entering the system each year, slowing issuance and increasing scarcity, thus driving prices higher.
Logic using S2F model
The logic behind using the S2F (Stock-to-Flow) model is that it is directly related to the Bitcoin price. This means that when charting, the S2F indicator will also have a price-related component that has historically seen significant increases following halving events. As scarcity increases, the price predicted by the S2F model usually increases.
In April and May after the Bitcoin halving, Bitcoin’s S2F ratio will exceed that of gold!
Signals investors should pay attention to
Investors planning to invest in Bitcoin should pay attention to the S2F indicator before and after the halving. An ideal time to enter might be after the halving, to watch the model price line rise and the difference between the actual price and the model price decrease. It is important to note that a difference or deviation in the increase is acceptable, because who doesn’t want the actual price to exceed the model price?
Therefore, if you plan to enter the market after the halving event, you may consider entering the market after the halving cycle ends, when the actual price line touches the reasonable price line, and the actual price line starts to rise. You can then bet that the actual price line will cross the model price line.
Hash rate
Bitcoin’s hash rate refers to the total computing power used for mining. The higher the hash rate, the more secure the Bitcoin network is.
Miners react to halving
If you plan to track hash rate metrics before and after the halving, you will understand that the event is designed to reduce the block reward after every 210,000 blocks. The reduction in rewards could impact miners’ profitability, thereby lowering hash rates during the halving process.
As a trader, you can keep an eye on the hash rate indicator to look for shorting opportunities. If the hashrate drops immediately after the halving, the price may fluctuate, which may be a good opportunity to short Bitcoin. However, if you plan to go long, it’s best to wait until Bitcoin’s built-in difficulty adjustment protocol kicks in and the hash rate stabilizes. Once this happens, you can adjust according to the S2F model and choose the time to enter.
4 Top Bitcoin Investment and Trading Strategy Tips
Diversified investment portfolio
Diversification is an important aspect of successful cryptocurrency trading. It involves diversifying your investments into different digital currencies to reduce risk. By diversifying, you avoid overexposure to a single asset and protect yourself from potential losses.
For example, instead of investing all your money in one digital currency, it might be better to allocate it to established tokens such as Bitcoin and Ethereum, as well as promising altcoins. This strategy helps traders benefit from multiple opportunities in the market. But remember, diversification does not guarantee profit, and you should conduct thorough research on each asset before investing.
Develop a clear trading plan
Having a clear trading plan is crucial to successful digital currency trading. A trading plan should outline trading objectives, risk tolerance, entry and exit strategies, and criteria for selecting assets. A clear plan can help you stay disciplined and avoid making impulsive decisions based on emotion or market noise.
For example, you can set specific profit targets and stop-loss levels for each trade to ensure you have a predetermined exit point to protect your gains or limit your losses. By sticking to your plan, you maintain a structured approach to trading and increase your chances of success. It's important to be flexible and adjust your plan as market conditions change.
Fundamental analysis
Another important digital currency trading tip is to combine technical analysis with fundamental analysis. Technical analysis focuses on price patterns and charts, while fundamental analysis involves assessing the potential value of a digital currency based on factors such as project development, team strength, and market adoption. By using both methods, you can gain a more complete understanding of the market and make informed trading decisions.
For example, before investing in a new altcoin, research its project goals, utility, and market potential. This will help you determine whether the coin is worth investing in or if it is just another over-hyped project. Keep in mind that fundamental analysis is more subjective than technical analysis and may require more time and effort to master. It can provide valuable insights and help you discover hidden gems in the crypto market.
stay patient and disciplined
Patience and discipline are essential qualities for successful cryptocurrency trading. Avoid chasing quick profits or entering trades without proper analysis as this can lead to impulsive decisions and increased risk.
Instead, wait for quality trading opportunities that fit your trading plan and strategy. Stick to your predetermined entry and exit points and avoid making adjustments based on emotions like fear or greed. Being patient and disciplined can help you minimize your losses and maximize your profits in the long run. It is important to note that no trading strategy is foolproof and even the most disciplined traders can suffer losses.
The Best Cryptocurrency Exchanges of 2024 Where You Can Buy BTC
| Best Cryptocurrency Exchange in Malaysia | score | handling fee | Bonus offers |
| Huobi | 3.8/5 | 0.20% | Get $700 + 90,000 SHIB |
| Huobi | 3.8/5 | 0.20% | Get $700 + 90,000 SHIB |
| MEXC | 3.8/5 | $0 | Get 1,000 USDT bonus |
| Binance | 4.9/5 | 0.10%-4.5% | no promotion |
| KUCOIN | 4.7/5 | 0.1% | Receive $500 bonus |
| BYBIT | 4.0/5 | 0.1%-0.3% | Get 50USDT bonus |
| BingX | 4.1/5 | 0.1% | Get 30USDT |
| etoro | 3.9/5 | 1% | Get a $10 bonus |
Summarize
Successfully trading digital currencies in 2024 requires mastering technical analysis, diversifying your portfolio, developing a successful trading plan, and maintaining a trading log. By following these cryptocurrency trading tips and insisting on continuous improvement, you will be well on your way to achieving your trading goals. Remember, each strategy has its pros and cons, so stay vigilant and adapt to the ever-changing cryptocurrency landscape.
More Bitcoin news, prices, and cryptocurrency trading guides at:CryptoPie Let everyone no longer miss any opportunities to get rich due to poor information.
