New year, new goals, right? If you are looking to build your crypto portfolio for long-term success this January, I believe there is one cryptocurrency that all investors should prioritize: Bitcoin (BTC 0.02%).
There’s no reason to mince words: Bitcoin (and all crypto) had a terrible 2022. Critics are once again writing off the digital currency. But if history has taught us anything, it is that this is the time when there is the most to gain.
I know already
In bitcoin’s 14-year existence, it has gone through about three bear markets; Some may argue and say there were four. Anyhow, the point is that Bitcoin is no stranger to declines of 70% or more.
From an all-time high of $1,147 in 2012, Bitcoin plummeted as low as $177 over the course of just over a year – a whopping 85% drop. After hitting another all-time high of just under $20,000 in December 2017, it plummeted to as low as $3,200 the next year — another drop of more than 80%.
It’s always 20/20 in hindsight, but looking back at those previous dips, the naysayers were in full force – just as they are today – and yet Bitcoin still found a way to rally to new highs.
Today we are in a similar position. Since its recent high, bitcoin is down about 75% and there seems to be more people vilifying it than welcoming it because it has come to the point where a price of $16,000 is cause for hysteria.
Up to this point, apart from a few percentages, my reasoning has only been loosely based on data. let’s change that
Time to crack some numbers
Why January might be one of the best times to buy Bitcoin has to do with its price action at and between halvings. These halvings are a mechanism in Bitcoin’s code that cuts the rate at which new bitcoins come into circulation in half. They occur about every four years, and the next time in May 2024.
When we compare Bitcoin’s price to data from the last three halvings, some interesting trends emerge. First and foremost, Bitcoin usually bottoms out when the next halving is about a year and a half away, plus or minus a few months.
Based on this, now that we are less than 18 months from May 2024, Bitcoin could be entering its most profitable time to buy. History shows that those who buy at this point in the halving cycle tend to gain the most.
Additionally, at the time of each past halving, Bitcoin’s price was around 50% of its previous all-time high. This is just an average, but if the same thing happened this time, Bitcoin’s price would be around $34,000 by May 2024, based on November 2021’s almost $70,000. This implies a profit of more than 100%.
Until 2024 and beyond
But the goal here is not to time the market; rather, it’s about maximizing upside potential over the long term. Especially when data shows Bitcoin hitting new highs about a year and a half after each halving.
In theory, if you endure multiple iterations of this cycle, you will eventually be the envy of people for buying bitcoin when it was only $16,000, as it is today.
By no means should you trade or assume that everything will play out exactly as it has in the past, but there are clearly trends and patterns in the data surrounding halvings.
Will it stay true this time? We can hope so, but only time will tell. Rolling around by May 2024, consider me a heavy buyer at these prices in January.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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