Bitcoin ( BTC ) News

Analyst Reveals How Bitcoin Halving Cycles Could Turn $5 Into $130,000

Renowned crypto analyst Plan B noted that those who trade around the Bitcoin halving cycles stood to gain better returns against those who buy and hold.

The trading veteran noted that most Bitcoin price increases have occurred around the previous three halvings. At the same time, BitMEX founder Arthur Hayes pointed out that geopolitical unrest can also fuel the bull run.

Bitcoin Halving: A Strategy to Turn $5 Into $130,000

Traders participating in the crypto market around the Bitcoin halving events alone could have recorded as much as 2,500% return.

“Being in the market only in these three [Bitcoin halving] periods and out during the rest would have increased a $5 investment to $130,000 (purple line) instead of $37,000 buy and hold (blue line),” Plan B stated.

The Bitcoin halving, occurring approximately every four years, historically triggers substantial price surges as the rate of new BTC issuance decreases by 50%. This scarcity spike provides a strategic window for astute investors to capitalize on substantial returns from Bitcoin.

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Bitcoin Stock-to-Flow Model. Source: PlanBTC.com

According to Plan B’s Stock-to-Flow model, traders should purchase Bitcoin six months before the halving and sell 18 months after. This approach aims to leverage Bitcoin’s cyclical patterns, capturing significant price increases surrounding the Bitcoin halving while sidestepping subsequent bear markets.

Bitcoin Triumphs During Times of Geopolitical Uncertainty

Moreover, BitMEX founder Arthur Hayes suggested that buying Bitcoin during geopolitical uncertainty and war could be a strategic move for a crypto trader.

According to Hayes, Bitcoin has demonstrated resilience and outperformed traditional assets like long-term US Treasury bonds during conflicts like the Ukraine and Russia war and the Hamas and Israel conflict. For context, BTC’s price has increased by 26% since the onset of the war in Palestine, while TLT, the long-term US Treasury bond ETF, is up just 3%.

“The smartest trade is going long crypto. There is nothing else that has outperformed the increase in central bank balance sheets like crypto,” Hayes said.

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Bitcoin vs TLT Returns. Source: Bloomberg

Hayes also pointed out that Bitcoin price performance showed it is a potential hedge against uncertainties associated with geopolitical tensions. Therefore, Bitcoin has been a reliable indicator of the fiat financial system’s health during these situations.

“Bitcoin has proven to outperform bonds during times of war. Even if there was an initial phase of weakness, I will buy dips,” Hayes concluded.

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