As Bitcoin halving draws near, more tension grows in the cryptocurrency market. For someone who came recently, particularly way after the last time this event took place, playing with Bitcoin may seem like a very dangerous thing to do.
Bitcoin halving is a massive event in the cryptocurrency world. However, it’s hard to be sure if people are excited about it as this occasion surely affects everyone: stakeholders, miners, and even casual investors in the Bitcoin community. It is like the Olympics, occurring approximately every four years. `
Knowing what to do before and during the Bitcoin halving can help anyone, even the newest guy in crypto, make decisions that will keep them on the safe side.
But what exactly is Bitcoin Halving? How heavy is its impact on the Bitcoin community?
Bitcoin Halving Explained
From the term itself, “Bitcoin halving” means reducing the miners’ rewards for adding new blocks to the Bitcoin blockchain by a striking half. This directly impacts the supply of Bitcoins entering the market, and we can only assume what will happen after that.
The Bitcoin network is set to only release 21 million coins. As of this writing, there are already 16 million Bitcoins in circulation. Without the halving event, that cap would be reached quickly, given that 3,600 coins are created daily.
To control the release of these coins, the reward given to blockchain miners is halved periodically, approximately every 210,000 blocks or roughly every four years. This mechanism slows the rate of creating new bitcoins, which is a good way to thwart inflation.
What Happened With The Previous Halving
It may be a relief to reveal to newcomers that Bitcoin Halving has happened before. As mentioned earlier, it occurs every four years, and the last event only proved that Bitcoin could survive such a massive change.
While it didn’t seem like anyone was affected, every year is different. Thus, assuming that everything will go as smoothly as planned would be careless. The market sits at the edge as they wait for Bitcoin Halving to unfold, and if you want to be on the safe and winning side, there are some strategies you can use to keep your crypto business alive.
Strategies Before the Bitcoin Halving
Here’s a list of to-dos you need to keep in mind before a Bitcoin Halving:
Educate Yourself About Past Halvings
Study the outcomes of previous halvings to understand potential market reactions. Typically, the halving leads to increased prices as the supply of new Bitcoins decreases. However, each halving is unique and influenced by a complex set of factors.
It may be wise to ride on the expert’s analysis: selling at the next peak and going back to buy the dip. Everyone must study the pre-halving spikes and drops to find the best timing for a crypto investment.
Assess Your Investment Portfolio
Review and adjust your investment strategy. If you’re holding Bitcoin, consider whether to hold through the halving to benefit from price increases due to reduced supply potentially. Diversification may also be wise to manage risk.
It may also be the best time to convert other crypto assets and invest in Bitcoin, as all halving led to a massive increase in value. Still, it may be a different case this time, so always proceed cautiously when investing in a volatile asset like cryptocurrency.
Increase Your Holdings If Appropriate
Depending on your risk tolerance and market analysis, consider increasing your Bitcoin holdings before the halving. Expecting reduced block rewards often drives up prices as the event approaches.
If you have the money to invest, which you can afford to lose, it’s always reasonable to make it work instead of letting it sleep in your savings account. Be careful when borrowing from the bank, as cryptocurrency is incredibly volatile, and it’s easy to lose everything without having enough knowledge of crypto investing.
That said, it may also be a good time to gamble and try to win more Bitcoin or cash through eSports betting or bitcoin online casino.
Prepare for Volatility
As we repeatedly warned, halvings may be your key to great winnings but this even creates a very unstable market. Ensure your investment strategy includes risk management tactics such as setting stop-loss orders or having cash reserves ready to take advantage of price swings.
Update Your Security Measures
With increased market activity comes a surge in cybersecurity crimes. Ensure the security of your cryptocurrency assets by updating and double-checking your wallets. Use two-factor authentication and revisit the protection level of your storage methods.
Be very careful when dealing with individuals or institutions requesting your personal information, particularly those requesting access to your computer to fix some “technical issues.” They’ll try to wipe out your bank account and gain access to your virtual wallets.
Activities You Should Do During the Bitcoin Halving
It’s crucial to know everything you must do before Bitcoin Halving takes place. The market will be set in chaos that it’ll be hard to reach gurus or even friends who has their eyes glued in their dashboards.
Monitor the Market Closely
Keep a close eye on the market as the halving reaches near. Crypto markets operate 24/7, so stay tuned for real-time developments that could affect the price of Bitcoin. New cryptos might emerge and attempt to steal the spotlight so watch out for promising anime crypto, NFT, and meme coins.
Engage with the Community
The cryptocurrency community can provide insights and sentiment analysis that are not immediately apparent from market data alone. Engage with forums, social media, and news outlets to comprehensively view the halving’s impact.
Be Ready to Act
Have a clear action plan for different scenarios as the halving occurs. As you hear more stories and read more crypto expert tweets, you’ll understand whether buying, selling, or holding your assets is the best response to any given situation.
Consider the Impact on Mining
Miners, particularly those working on old tech, will be greatly impacted once the new rate is applied. With profitability on the line, miners should assess the cost-effectiveness of continuing their operations. If you’re a miner, you might need to upgrade your mining equipment or consider joining a mining pool to maintain profitability.
Watch Out for Scams
High-profile events like the Bitcoin halving can attract scammers. Be aware of enticing schemes that promise instant and guaranteed returns. Do not give anyone your wallet or banking access, nor let others use your devices. Always do due diligence before committing your funds.
Post-Halving Considerations
After the halving, evaluate the immediate impact on the market and to your investment. Analyze price movements, market sentiment, and media coverage to gauge the event’s impact. Adjust your strategy based on your observations and begin your plan for the long term. History suggests a prolonged effect on the price of Bitcoin as a result of halving, so this may be something you can exploit to your advantage.
Caroline is doing her graduation in IT from the University of South California but keens to work as a freelance blogger. She loves to write on the latest information about IoT, technology, and business. She has innovative ideas and shares her experience with her readers.
