Yahoo Finance Will Bitcoin Be a Buy in April? Here’s the Data
Just hours away from the much-anticipated bitcoin halving set for April 19, it’s fair to say that the asset has been on a roll lately despite some pre-halving volatility. A confluence of factors has helped push bitcoin higher following a disastrous couple of years for the cryptocurrency ecosystem.
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The Securities and Exchange Commission’s Jan. 10 approval of spot bitcoin exchange-traded funds has not only attracted enormous interest and asset flows but has added some legitimacy to the asset. Meanwhile, bitcoin breached its previous all-time-high record on March 14, reaching $73,750.07.
As of early morning on April 18, bitcoin was at around $63,000, up 110% in the past year, 38% year to date and down 0.3% in the past month, according to CoinGecko.
“Data from previous cycles shows that bitcoin’s price has experienced increased volatility in the lead-up to the halving, and we are seeing a similar trend currently playing out in markets,” said Lucas Kiely, chief investment officer, Yield App. “Over the past week, bitcoin experienced a drop of around 16% to a low of around $60,000.”
He added that historically, it has fallen 10% to 20% in the days following a halving, so further downside in the short term is possible.
So, is bitcoin a buy in April? Take a look at the data and at what experts have said.
The Three Past Halvings: Price Increases of 8,762%, 2,575% and 594%
Experts said that historically, halvings — which happen every four years — have led to price appreciation, adding that this year should not be an exception. Halving means that the number of bitcoins made is cut in half, reducing the rewards for miners. This process is inherent to bitcoin’s protocol, just like the fact that its supply is capped at 21 million coins, and further boosts the asset’s scarcity.
Here’s how past halvings have impacted bitcoin’s price, according to Bitpay.
First Halving, November 2012: 8,762% Increase in Price
Price at time of halving: $13
Following year’s peak: $1,152
Second Halving, July 2016: 2,575% Increase in Price
Price at time of halving: $664
Following year’s peak: $17,760
Third Halving, May 2020: 594% Increase in Price
Price at time of halving: $9,734
Following year’s peak: $67,549
According to Peter Eberle, president, Castle Funds, it seems like this year, bitcoin may be repeating pieces of both 2016 and 2020 pre-halving price tendencies in order to offer investors one final bargain-buying opportunity in the pre-halving period.
“In momentum-driven markets such as bitcoin, we look to historical patterns in price movements,” he said. “One of these patterns is a ‘retracement,’ or ‘retrace,’ where prices rise rapidly and then fall before making another move upwards. In the last two bitcoin halvings, we saw similar retracement patterns.”
He added that in 2016, this pullback was -38% deep and lasted three to four days, while in 2020, it was -20% deep and lasted 56 days.
Bitcoin Spot ETFs: $58 Billion in Assets Under Management
Spot Bitcoin ETFs have attracted $58 billion since their launch just three months ago, according to an April 11 CFRA Research note. To put this in context, that represents more than half of the total assets in gold ETFs.
In turn, this is one of the reasons Graeme Moore, head of tokenization, Polymesh Asssociation, said, “Yes. Bitcoin is still a buy in April, both before and after the halving.”
“While there have been three previous halving cycles, this fourth cycle is unprecedented as it closely follows the launch of the first U.S. spot ETFs,” he said. “Bitcoin ETFs are proving that the broader market is beginning to see the value in a global, decentralized, provably scarce asset.”
Other experts echoed the sentiment, saying that while the halving itself is important, the ETF factor, coupled with potential stablecoin legislation, makes this halving different from previous ones.
“What’s really driving the price are these ETFs and a renewed push for sound regulation at home. It wouldn’t surprise me to see the price of bitcoin double, perhaps by the end of this year,” said Daniel C. McCabe, CEO of Flexa.
This Is a Different Halving — So What’s Next?
David Shafrir, CEO, Secure Digital Markets, said that drawing from historical insights, he anticipates bitcoin’s price to maintain its upward trajectory in April, potentially reaching new heights in the coming months.
“While geopolitical tensions may introduce short-term volatility, bitcoin’s fundamentals remain robust, offering investors a diversified asset class to navigate uncertain times,” he said.
According to Shafrir, these macroeconomic and geopolitical factors might also affect the asset’s price.
“I think [bitcoin will be at] mid-$50s post-halving. The market has historically sold the halving news,” he said, adding that after 30 to 45 days, the market will retest new highs at around 78,000.
“However, this price discovery does not take geopolitical tensions into account. If the Israel/Iran situation escalates, I can see the market retracing to the $50,000 range until we see some sort of resolution in the region,” he added.
Another factor that makes this halving different, and which could impact the price, is that this cycle marks the first time that this re-accumulation range is developing around the new all-time high area, said Eberle.
“The re-accumulation phase can last multiple weeks, and even up to 150 days,” he said. “Many investors get shaken out in this stage due to boredom, impatience and disappointment with the lack of major results in their BTC investments in the immediate aftermath of the halving.”
Phillip Shoemaker, executive director of Identity.com, agreed with this premise, saying that while he’d love to see a bitcoin boom right after the halving, “I don’t think that will happen.”
“People tend to struggle with how to understand the halving — It happens every cycle. Usually, BTC chops for a while right after the halving kicks in, but then, after a few months, we see the real rally kick in,” he said.
According to Shoemaker, people overestimate the halving’s impact in the short run but then underestimate it in the medium and long runs.
“And I expect the same to play out this time around. As for price targets this year, I really think that Bitcoin will hit $100,000,” he noted.
When Will the New High Potentially Be?
Historically, it has taken bitcoin 480 days, on average, from the halving to reach a new all-time high, explained Yield App’s Kiely, noting that BTC likely still has a long way to go before the top.
“This means bitcoin remains a worthwhile investment now, despite its 113% return over the past year,” he said. However, he noted that it’s unlikely that investors will see the 600% return bitcoin experienced after the last halving, so it’s important to temper your expectations.
“When choosing an entry point, investors must eliminate emotional decisions and stick to a strict strategy. In practice, most investors struggle to time the market correctly, so a dollar cost averaging (DCA) strategy over the coming weeks may be the most prudent choice for all but the most experienced traders,” he added.
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