In the world of cryptocurrency, Bitcoin stands out as a star player, especially around the event known as “halving”. This event, which happens roughly every four years, dramatically cuts the rate at which new bitcoins are created by half. Picture it like a sudden reduction in the supply of new apples in a market – it makes the existing apples more valuable.
PlanB, a well-known figure in the crypto community, highlighted an interesting strategy for Bitcoin investors. He pointed out that most of Bitcoin’s price increases happened around its three halving events. If you had invested only during these specific periods (starting six months before and ending eighteen months after each halving) and stayed out of the market at other times, your $5 investment could have rocketed to $130,000. This is in stark contrast to a more conservative approach of buying and holding, which would have resulted in a return of $37,000.
Now, let’s talk about Bitcoin during geopolitical instability. Arthur Hayes, the founder of BitMEX, suggests that buying Bitcoin during times of global unrest or war can be a smart move. He notes that Bitcoin has outperformed traditional assets like long-term U.S. Treasury bonds in such scenarios. For example, during conflicts like the Russia-Ukraine war or the Hamas-Israel conflict, Bitcoin’s value increased significantly, while traditional investments showed only modest gains.
Hayes argues that in times when central banks are increasing their balance sheets – essentially printing more money – cryptocurrencies like Bitcoin shine. Their performance during these periods positions them as potential hedges against the instability of traditional fiat currencies (like the dollar or euro).