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Leverage Your Bitcoin During The Halving: Smart Borrowing Strategies

With the next Bitcoin halving date set in April 2024 (an exact date can't be predicted at the time, but it's expected to happen between the 16th and the 21st of the month), it can be considered an excellent time for Bitcoin investors to look into new ways to grow their money. One strategy is borrowing cash while leveraging their existing Bitcoin as collateral. In this blog, we'll discuss what the halving is, its historical influence on the price and how hodlers can benefit from this event. 

Bitcoin Halving 101: Understanding Its Impact on Crypto Borrowing

Before we go into the complexities of leveraging Bitcoin for borrowing, let’s get to know the fundamentals of the Bitcoin halving phenomenon and its significance in shaping the cryptocurrency market dynamics.

Once every four years, Bitcoin undergoes an event where the reward for mining transactions is cut in half. This is part of how Bitcoin is set up to work. Bitcoin miners (powerful computers that verify Bitcoin transactions and generate new BTC in the process), as well as the people who own and operate these machines, are incentivized by the reward price. 

The reason for the Bitcoin halving is to limit the number of new bitcoins produced to create scarcity, similar to precious metals like gold. This process aims to give Bitcoin intrinsic value and protect against hyperinflation. By reducing the rate at which new bitcoins are introduced, Bitcoin remains stable and viable as an asset class.

Bitcoin halvings have historically influenced the price of Bitcoin. Each halving event has been accompanied by a significant rise in the price of Bitcoin, driven by increased demand amid reduced supply. For example, as per CoinMarketCap, during the latest halving in May 2020, market sentiment was optimistic. Investors anticipated the supply shock, leading to a steady accumulation of Bitcoin. 

As the event occurred, the reduced supply coupled with sustained demand from institutional and famous investors such as Tesla, drove Bitcoin's price increase from around a low of $8,000 to over $30,000 by the end of 2020. In January 2021, it hit nearly $36,000 per bitcoin.

History of Bitcoin Halvings

The First Bitcoin Halving Event - 2012

Bitcoin's first halving occurred in 2012, widening its audience and marking a key point in its price movement. This event made investors interested in its potential for growth. The reward for every block was cut from 50 btc to 25 btc. The price for 1 Bitcoin in 2012 was as low as $11 USD and it ended up increasing to around $1,000 USD within a year. 

The Second Bitcoin Halving - 2016

In 2016 the halving event  continued to influence the price of Bitcoin, further establishing notable trends in price movement and attracting a growing base of investors intrigued by its evolving potential. It reduced the miner rewards to 12.5 bitcoins per block. The price surged from $602 USD at the beginning of the year to around $1300 USD at the end of the year - doubling its value, with a significant increase from the previous halving. 

The Third Bitcoin Halving - 2020

Amidst the global pandemic, Bitcoin's third halving in 2020 ignited a remarkable surge in price, attracting unprecedented attention and investment. This event underscored Bitcoin's resilience and growing appeal in uncertain times, marking a significant chapter in its journey. It gained significant popularity, and many mainstream media covered the topic. Celebrities such as Elon Musk have helped popularize the entire blockchain space and opened up the opportunity for a new wave of investors to enter the market. The price at the beginning of the year was around $7700 USD. It ended up the year close to $30,000 USD, and the next year, in 2021, Bitcoin peaked at $61,000 USD. 

The Impact on Crypto Borrowing

The upcoming Bitcoin halving is anticipated to have a substantial effect on price volatility - expert predictions, like Pantera Capital’s, forecast Bitcoin reaching around $148,000 USD in 2024, potentially affecting trading patterns, borrowing habits, lending conditions, expenses, market trends, and regulatory factors. 

How to Secure Fiat for More Bitcoin Before the 2024 Halving Hits?

For Canadian investors looking to capitalize on the potential price appreciation of Bitcoin leading up to the upcoming halving, leveraging existing BTC holdings to access liquidity can be a strategic move. 

We at APX Lending offer a unique opportunity for investors to unlock the value of your Bitcoin holdings without the need to sell your assets, safely and securely. Unlike traditional lending institutions, APX Lending specializes in catering to the specific needs of crypto investors, offering a unique borrowing experience with personalized customer support. 

Our user-friendly platform ensures a smooth and transparent process, from loan application to disbursement, enabling borrowers to access funds quickly and efficiently. 

At APX, the collateral is not reinvested or rehypothecated and remains visible on the blockchain throughout the duration of the loan, guaranteeing transparency and trust. 

Secure a loan with APX Lending today before the next halving. 

FAQs

Is Bitcoin halving a good period to invest in Crypto?

Bitcoin halving events historically ignited substantial bullish momentum in cryptocurrency markets. Prices reached new all-time high levels of supply-constricting events exciting global investor sentiment.

Will BTC go up after halving?

While past performance is not indicative of future results, historical data suggests that Bitcoin's price tends to increase before and after halving events due to supply reduction and increased demand.

APX Lending does not offer financial or tax advice. We strongly encourage you to consult with a certified financial or tax professional for guidance on any related inquiries you may have.