The Bitcoin halving is one of the most awaited events for the 2024 crypto market since investors and crypto experts have long discussed the matter. While we’re sure that the mining reward will decrease, volatility is still in question as it’s not entirely known whether the halving will help make significant profits or will flop.
Therefore, many crypto users have tried developing a sustainable strategy that can protect them from risks but also put the base of a profitable portfolio. Moreover, the uncertainty over a settled date for the Bitcoin halving might take investors by surprise, so being prepared is crucial.
Taking that into account, researching strategies and methods of improving your portfolio is necessary, so here are some ideas on how to withstand volatility spikes during the halving.
Capitalize on diversification
Diversification is the no. 1 rule for investors to play it safe and benefit from long-term investments. So, being a Bitcoin investor doesn’t mean you have to limit your strategy to this cryptocurrency because the market offers various digital assets based on blockchain technology whose value will act as a safety net.
It’s recommended that you approach investing in the following:
- Stablecoins, utility tokens and governance tokens;
- Blockchain protocols like PoW and PoS;
- Futures and options contracts;
- Ethereum NFTs and Bitcoin Ordinals Magic Eden;
- DeFi projects;
You can also read about publicly traded cryptocurrency companies that focus on mining, payments and hardware manufacturers, but you may need to research more deeply to understand the benefits and drawbacks.
Focus on dollar-cost averaging
The DCA (dollar-cost strategy) is one of the most popular strategies leveraged by investors regardless of their experience because it’s safe and easy to employ. The method requires you to invest a certain amount of money during regular intervals despite Bitcoin’s price being at its lowest or highest.
Although it may seem simple-minded, the strategy is actually the best way to reduce the impact of volatility in the long term because you’re spreading the investment over time instead of assets. Of course, DCA is stronger when used with diversification at the same time, but it can also be leveraged individually.
DCA helps maintain a steady investment rate, so you don’t have to time the market or predict short-term price fluctuations.
Experiment with timing
If you’re eager to try something more dynamic, you could try market timing. In this method, you use certain software solutions, strategies and movements to change your portfolio elements based on how good your predictions about the Bitcoin price are.
To succeed, you need to be up-to-date with the latest crypto news and use that information to conduct market analysis. On the other hand, studying Bitcoin’s halving history helps better predict prices and trends. Usually, there’s a general optimistic investor behavior before the halving, meaning prices are increasing, but this can change from one halving to another.
Joining multiple and diverse communities might help you stay updated and receive valuable advice on how quickly you should change your techniques in accordance with new trends.
Try new Bitcoin assets
Besides investing in Bitcoin, which is a highly volatile cryptocurrency, you can approach some of its related assets that are tied to its value but aren’t as risky. For example, derivatives are a popular choice among investors who want a backup plan for covering potential losses.
Derivatives can be either options or futures for short-term sell-offs and price declines because they can be used to withstand Bitcoin’s plunge. These contracts are flexible to handle due to their timeframe requirements that allow users to buy Bitcoins without being obliged to in regard to the contract.
Bitcoin Ordinals are also a famous choice for investors since they’re similar to NFTs, but they’re safer, more liquid and leverage a transparent royalty model. Although Ordinals are quite new on the market, they’ve made it to the mainstream pretty quickly.
Choose your investment style
Depending on your needs or goals, you might want to invest in the short term or the long term. Each method has its own benefits and drawbacks, but both need to be approached in a certain way to guarantee success.
For example, a long-term investment strategy implies buying more often than selling your crypto to build portfolio value. Investors also know this as the hold strategy, where you “hold on for dear life” on your Bitcoins to maintain low volatility. However, profits are also minor at the moment.
On the other hand, a short-term strategy is for those who have a high-risk tolerance because it ensures short-term gains that can be dangerous to achieve. Price movements must be monitored frequently, along with trends, because they’ll be the base for entry and exit points.
Be wary of market manipulation
Unfortunately, the halving event is the perfect occasion for hackers and attackers to take advantage of those who are less educated or simply unlucky. Scams and frauds can be significant during this period, so make sure to always check any website or app you enter or download before making any inquiries. Along with some of the most sophisticated ways to scam people, one of the most efficient involved creating an apparent trustworthy site that investors may choose
to use due to its usefulness and user-friendliness.
Other crypto scams include the following:
- Phishing;
- Fake giveaways;
- Pump and dump schemes;
- Blackmail;
- Fake ICO;
- Malware;
- Promises of free money;
Learning about common scams and how they work is essential to avoid them because their occurrence will increase during these months. Investors are advised to work with only reputable sites and apps that are trustworthy and reliable.
Final Considerations
This year’s Bitcoin halving is one of the most important in the crypto sector because it will influence the entire market and can change the investment dynamic. While the mining reward will diminish again, investors might benefit from great Bitcoin rates and some limited stability, so taking the time to learn about volatility and learn new strategies is essential. However, make sure you can avoid scams, because they’ll be prevalent for a while.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
