The next step: Preparing for Bitcoin’s Fourth Halving and Beyond

We are closing in on the fourth Bitcoin (BTC) halving. And while Vikara provides exposure to tokens outside BTC (and Ethereum (ETH)), BTC tends to lead alts…higher or lower. Thus, we figured it is a good time to take stock of where we are in the potential bull market cycle and when do alt tokens potentially move significantly higher. 

We are less than two weeks until the fourth halving with the date slated for 4/20. The past two Bitcoin halvings have both experienced pre-halving sell-offs. This time is no different.

In 2016, BTC experienced a 30% sell-off that started 22 days before halving (Chart 1). Then post halving was rangebound for nearly four months after which the face melting gains started.

Chart 1 – BTC (2016-2017)

Source: TradingView

In 2020, there was a 19% pre-halving drop over only 4 days followed by a sideways market for 3.5 months (Chart 2). Outrageous gains ensued with the Total3 Index (all tokens ex-BTC and ETH) up over 13x from October 2020 to November 2021.

Chart 2 – BTC (2020-2021)

Source: TradingView

So where are we now? BTC peaked at 73.7k on March 14, falling to 61k on March 20, a drop of ~17% (Chart 3). It has since recovered and now sits at 69.5k.

Chart 3 – BTC (2024)

Source: TradingView

So what happens next? 

We’re 12 days from the next halving. Some claim this is a left hand cycle, meaning gains have been pulled forward with the cycle playing out over the next 12 months versus 18 months like previous cycles. Naturally no previous cycle is exactly like the next, but 2016 and 2020 were very similar with 2024 following the same path.

Outside the halving, the sector has existing and potential tailwinds:

  • spot BTC ETF flows and potential spot ETH ETF approvals
  • institutional adoption (BlackRock and Fidelity some of largest BTC owners) with BlackRock launching a tokenized fund on Ethereum
  • accommodative monetary policy


As a reminder, the global digital asset market cap ex-BTC and ETH is less than 0.50% of global equities but adoption, especially among younger users and those outside developed markets, continues to surge.

If history is a guide, investors still have time to gain exposure to potentially massive outperformance, but the clock is ticking.

 

Hat tip to CristiWeb3 on Trading View for creating the charts 1 and 2.

Vikara CO-FOUNDER & PORTFOLIO MANAGER

Mark Riccio, CFA.

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