Optimal Timing for Buying Bitcoin: Investment Strategies Based on the Four-Year Cycle and Halving Events

Understanding the Best Time to Buy Bitcoin: Overview of the Four-Year Cycle

One of the most crucial concepts in understanding Bitcoin’s price volatility is the four-year cycle. This cycle is formed by supply shocks triggered by halving events and is characterized by repeating patterns of price surges (booms) and subsequent corrections (busts).

The halving is when mining rewards are cut by 50%, which reduces the supply of newly issued Bitcoin and raises its scarcity. This interplay between limited supply and speculative demand drives cyclical price movements, eventually settling the market at a new equilibrium.

By understanding the four-year cycle, investors can grasp the broader market trends and identify optimal buying moments. Historical data shows that prices tend to peak after a halving, followed by a correction phase. Recognizing this cycle allows for more strategic investment decisions.

Formation of Bull Markets

Halving-induced supply reduction directly exerts upward price pressure. As the amount of new Bitcoin issued drops and demand remains steady, the supply-demand balance shifts, making price increases more likely.

Speculative demand, fueled by anticipated future scarcity, further accelerates price gains. Particularly, when individual and institutional investors driven by FOMO (fear of missing out) enter the market, upward momentum intensifies. Macroeconomic uncertainties and Bitcoin’s role as an inflation hedge also contribute to increased demand.

During this bullish phase, market participants become highly optimistic, and prices can soar well beyond previous highs. Past cycles have seen these uptrends last from several months to over a year.

Formation of Bear Markets

Uptrends don’t last forever—they eventually peak. Profit-taking by early investors and a slowdown in new buyers can trigger sharp declines. This drop, called a “blow-off top,” often results in panic selling by investors who bought near the peak, driving a broad market correction.

In bear markets, sentiment turns pessimistic and selling pressure intensifies. Prices can drop sharply, with corrections continuing until excesses are worked off. However, this decline also serves as a reset phase ahead of the next bull cycle—creating attractive opportunities for long-term investors to buy at lower prices.

Progressively Higher Lows and New Equilibrium Levels

Bitcoin bear markets have shown a notable trend: each cycle’s low tends to be higher than the previous one. This likely results from more investors recognizing Bitcoin’s value after major bull runs and opting to hold for the long term.

Once prices stabilize and speculation subsides, the market establishes a new equilibrium, typically higher than the last cycle’s low. This points to Bitcoin’s long-term potential for appreciation.

Bubble Phases and Preparation for the Next Cycle

The bust or correction phase can last from several months to several years. During this time, the market digests speculative excess and returns to a healthier state. When the adjustment ends and supply and demand rebalance, new investors return, setting the stage for the next halving cycle.

Understanding this cycle helps investors see the broader market direction and avoid emotional decisions. With a long-term outlook, they can stay focused amid short-term volatility and make more strategic choices.

What Is the Bitcoin Halving?

The Bitcoin halving is when mining rewards decrease by 50%. This event restricts the issuance of new Bitcoin, increasing scarcity and sometimes putting upward pressure on prices.

This mechanism was intentionally designed by Bitcoin’s creator, Satoshi Nakamoto, to compensate for the lack of central bank control over supply, as is common with fiat currencies. Bitcoin’s supply is capped at 21 million, and this limit—along with scheduled halvings—drives the supply-side dynamics that underpin Bitcoin’s market cycles.

The halving occurs roughly every four years and is a major factor shaping Bitcoin’s price cycles. Understanding this periodicity helps investors forecast price trends and pinpoint optimal buying windows.

How the Halving Works and How to Calculate It

Bitcoin halvings happen about every four years, or every 210,000 blocks, as encoded in the protocol. This interval cannot be changed. Key points include:

1. Supply Reduction

Halving the mining reward reduces the flow of new Bitcoin into circulation, increasing scarcity and potentially driving prices higher. For instance, past halvings have reduced block rewards from 50 BTC to 25 BTC, then to 12.5 BTC, and now to 6.25 BTC.

This supply reduction directly impacts the market’s supply-demand balance. If demand stays steady, less supply can drive prices higher.

2. Investor Sentiment Effects

Because halvings are predictable, many investors build expectations that “prices might rise,” energizing the market. This anticipation can become priced in, leading to price increases around the halving event.

To estimate the next halving block height, use this formula:

Next Halving Block Height = Current Block Height + (210,000 – (Current Block Height % 210,000))

For example, if the current block height is 835,835:

Next Halving Block Height = 835,835 + (210,000 – 835,835 % 210,000) = 840,000

However, block generation speed can vary, so the actual date may differ slightly. This calculation helps investors anticipate the next halving and plan accordingly.

Short-/Mid-Term Trading vs. Long-Term Investment Perspectives

Recent market trends indicate that Bitcoin can offer attractive opportunities for short- and mid-term trading. With an uptrend emerging after the latest halving, the market presents profit potential for those targeting short- to medium-term price moves.

In particular, institutional entry and capital inflows via ETF approvals have supported prices, creating a favorable trading environment. Higher liquidity helps traders capitalize on price swings.

From a long-term perspective, waiting for a correction phase after a price peak can yield better entry points. Even for short- and mid-term strategies, risk management is essential in the volatile crypto market—investors should rely on technical and on-chain analysis for informed decisions.

Long-term investors who focus on the broader four-year cycle can avoid getting caught up in short-term noise. Buying during corrections may position them for sizable gains in the next bull phase.

Price Action After Halving: Time to Peak

Pantera Capital, a leading US investment fund, notes that the price impact of Bitcoin halvings tends to emerge gradually, based on historical data.

Typically, prices bottom out about 477 days before the halving, then begin to rise. After the halving, the uptrend historically lasts an average of 480 days. This lines up with BTC peak forecasts from US investment firm VanEck.

Historical Time to Peak After Past Halvings

According to BiTBO data, the time from halving to price peak was as follows:

• 2012 Halving: Price peaked about 368 days after the halving
• 2016 Halving: Price peaked about 526 days after the halving
• 2020 Halving: Price peaked about 518 days after the halving

These numbers show that Bitcoin typically peaks about one to one and a half years after a halving. This knowledge can help investors wait for the post-peak downturn and target entry at relatively lower prices.

In past cycles, sharp declines during the post-peak correction phase were common. However, these drawdowns also set the stage for the next bull cycle and present prime opportunities for long-term buyers.

Key Risks and Factors That May Affect the Market

Keep in mind, these trends are based on past halving data—they do not guarantee future results. Geopolitical risks, market technical factors, and macroeconomic influences can all affect prices.

For instance, regulatory shifts, economic policy changes, and institutional activity can move Bitcoin’s price significantly. As the market matures, its behavior may also diverge from previous cycles.

Investors should reference historical trends but must always stay alert to current market developments and adjust strategies as needed.

Indicators That Identify the Best Time to Buy

Bitcoin’s cyclical patterns are well documented, but for beginners, timing a purchase using technical analysis alone can be challenging.

By relying on widely used industry indicators, investors can identify the bottom of the four-year cycle. Here are three key indicators to guide optimal timing decisions.

MVRV Z-Score

The MVRV Z-Score compares Bitcoin’s market value (market cap) with its realized value (the price at which coins last moved on-chain) to judge whether the price is fair.

If the market value far exceeds realized value, the Z-Score is high, signaling possible overheating. A low Z-Score suggests potential undervaluation.

Investors who buy when the Z-Score enters the green zone can benefit from market recoveries and achieve high ROI. This metric is mainly used by long-term investors to pinpoint market peaks and bottoms.

MVRV Z-Score offers an objective measure of market overheating or undervaluation, helping investors avoid emotional decisions. Historically, buying at low Z-Score levels has delivered strong returns in subsequent bull cycles.

Bitcoin: Realized Cap – UTXO Age Bands

Bitcoin: Realized Cap – UTXO Age Bands visualizes the age distribution of unspent transaction outputs (UTXOs), showing what share of Bitcoin supply is held by coins of various ages.

When evaluating post-halving buying opportunities, this metric helps track trends such as increased selling by short-term holders or a declining share of long-term holders. When long-term holders’ share grows, it can signify that prices have bottomed and present attractive buying opportunities.

This indicator is pivotal for understanding market participant behavior. Rising long-term holder share often means the market is near a bottom—a favorable time for investors to buy in.

Crypto Fear & Greed Index

The Crypto Fear & Greed Index measures crypto market sentiment on a scale from 0 to 100, analyzing volatility, trading volume, and other factors to assess “fear” and “greed.”

This indicator is helpful when considering Bitcoin and crypto entry points. After the halving bull cycle ends, the greed index falls and the market cools, making this a useful tool for long-term buying decisions.

Generally, buying when the fear index is high (the market is pessimistic) and selling when the greed index is high (the market is optimistic) can help maximize gains. Using this indicator supports more rational, less emotional investment decisions.

How Recent Market Conditions Impact Bitcoin

US Policy Shift Toward Crypto Adoption

US crypto policy has seen major changes in recent years. Political leadership has become more pro-crypto, boosting sentiment in crypto markets.

For example, the US government’s decision to hold rather than sell its Bitcoin reserves—and treat them as a strategic asset—had a significant market impact. Republican lawmakers reiterated their view that Bitcoin should be part of the national strategy.

Specifically, the “2024 BITCOIN Act (Boosting Innovation, Technology and Competitiveness Through Optimized Investment Nationwide)” was submitted to the Senate, including a mandate for the Federal Reserve to hold Bitcoin as a strategic reserve asset.

Perrianne Boring, founder of industry lobby group The Digital Chamber, told Fox Business:

If the proposed plans are realized, Bitcoin’s fixed supply means its potential is limitless.

In addition, crypto advocate Paul Atkins is a candidate for SEC Chair. Atkins, a former SEC commissioner, is expected to take a crypto-friendly stance.

Meanwhile, 18 Republican state attorneys general and the DeFi Education Fund have filed a lawsuit against the SEC over crypto regulation. A new administration could bring major changes to crypto regulation and policy.

Sources say there is a proposal to eliminate capital gains tax on US-issued crypto assets. If passed, profits from ADA, ALGO, XRP, HBAR, and similar tokens could become tax-exempt.

Global Moves to Create National Bitcoin Reserves

Inspired by the US strategy, governments worldwide are considering adopting Bitcoin as part of their reserves. While this could eventually reduce volatility, it may drive price gains in the short and medium term. Here’s how several countries are approaching Bitcoin reserves:

• Japan: Satoshi Hamada, an upper house member of the “Protect the Nation from NHK” party, submitted a written inquiry to the government about using crypto as reserves. He referenced US and Brazilian moves and proposed allocating part of Japan’s reserves to Bitcoin.

• Hong Kong: Legislator Johnny Ng revealed that the city is discussing adding Bitcoin to its financial reserves. He noted Bitcoin’s recognition as “digital gold” and its potential for fiscal strategy—while stressing regulatory compliance.

• Brazil: A bill was introduced to allocate 5% of the national budget to Bitcoin reserves—primarily to hedge against currency swings and geopolitical risks, and as backing for the central bank digital currency. The bill’s prospects remain uncertain.

• Poland: Presidential candidate Sławomir Mentzen has pledged to establish a strategic Bitcoin reserve if elected, aiming to make Poland a crypto haven with low taxes and friendly regulation.

• South Korea: The proposal for a national Bitcoin reserve was rejected. The financial regulator remains skeptical and prioritizes investor protection.

• Vancouver (Canada): Mayor Ken Sim proposed a Bitcoin reserve as part of the city’s fiscal strategy, aiming to evaluate Bitcoin’s potential as a hedge for financial stability.

• Bhutan: Bhutan operates environmentally friendly Bitcoin mining with hydropower and holds a significant amount of Bitcoin—building strategic assets worth about a third of its GDP.

• Russia: Lawmaker Anton Tokachev formally proposed a strategic Bitcoin reserve to Finance Minister Siluanov, arguing that traditional currency reserves are vulnerable to inflation and sanctions, while Bitcoin offers an independent alternative.

Surge of Capital Inflows Via Bitcoin ETFs

The first US spot Bitcoin ETF was recently approved, making Bitcoin more accessible to institutional investors and accelerating capital inflows.

Institutional investors—such as pension funds, hedge funds, and insurers—manage large pools of capital. Historically, they were cautious about crypto and focused on other instruments. ETF approval allows institutions to invest in Bitcoin with reduced risk, fueling surging interest.

Bitcoin trading has boomed recently, driven by halving events and ETF approvals. ETFs have quickly acquired a sizable share of circulating Bitcoin.

Data shows that ETFs now hold more BTC than Satoshi Nakamoto, the anonymous Bitcoin creator. On-chain analysis reveals that major asset managers hold a large share of the BTC in Bitcoin ETFs.

If these trends continue, steady long-term capital inflows into Bitcoin are likely, which could further support price growth. Leaders at major asset managers have said these ETF trends could turn Bitcoin into a massive market.

How to Identify the Best Time to Buy Bitcoin

Success in Bitcoin investing requires both good timing and a clear investment style. Each approach has different buying criteria, so establish your strategy beforehand.

Investment Styles and Buying Timing

Long-term investors should buy near the bottom of the four-year cycle. Short-term traders rely on technical analysis to target short-term moves.

Timing Your Purchase and Managing Costs

Besides timing, cost management is critical. Short-term trading involves frequent transactions, so you must account for trading fees, leverage interest, and option premiums. Overlooking these costs can seriously reduce profits.

Ki Young Ju, CEO of CryptoQuant and an on-chain analysis expert, warns against high-leverage trading:

Never use more than 2x leverage. Seriously, don’t do it. I have never seen an investor survive and succeed while using massive leverage.

This underscores the risks of leverage—profits and losses are both amplified. In volatile crypto markets, use leverage with extreme caution.

Long-term investors should minimize ongoing costs and aim to buy at low prices. Targeting entries during market cool-downs or corrections can maximize long-term gains.

By focusing on the four-year cycle and not getting caught up in short-term noise, long-term investors can make more strategic choices. Buying in correction phases can position them for large gains in the next bull market.

Summary: How to Identify Optimal Bitcoin Entry Points With a Long-Term View

Historical data shows that after post-halving peaks, prices typically correct, creating opportunities to buy at lower levels. Geopolitical risks, shifting policies, and ETF-driven capital inflows can all support prices and fuel the next bull market.

However, don’t get distracted by short-term volatility. Rely on your understanding of the four-year cycle and key indicators to make careful decisions. Strategic long-term investors focus on the big picture and avoid emotional trading.

To find the best time to buy Bitcoin, reference historical trends but always monitor current market and economic developments. With a patient, long-term outlook, you can improve your odds of success in Bitcoin investing.

FAQ

What Is Bitcoin’s Four-Year Cycle and Why Does It Occur?

Bitcoin’s four-year cycle is tied to the halving event. About every four years, mining rewards are cut in half, which reduces supply and tends to drive prices higher. The cycle consists of accumulation, pre-halving rallies, parabolic bull markets, and correction phases. The stock-to-flow model, investor sentiment, and market liquidity shifts are key drivers.

What Is the Bitcoin Halving Event and How Does It Affect Price?

The Bitcoin halving occurs every 210,000 blocks and cuts miner rewards by 50%. This reduced supply and increased demand have historically led to price increases. Lower miner revenue boosts investor demand and supports price growth.

According to the Four-Year Cycle Theory, Was 2024–2025 a Good Time to Buy Bitcoin?

Yes, 2024–2025 was seen as an ideal time to buy according to the four-year cycle theory. The cycle was expected to peak at the end of 2025, with a correction likely in 2026.

How Did Bitcoin Perform Before and After Previous Halvings?

After each halving, Bitcoin prices have surged. The first halving saw a 9,378% increase, the second 2,872%. The average post-halving decline was about 27%, followed by notable uptrends.

How Can Investors Use the Halving Cycle for Strategy?

Bitcoin halves every four years. History shows strong price appreciation after halvings. The next halving is in 2028. Build your strategy around accumulating before the halving and taking profits after, as explained in the halving glossary entry.

What Criteria Should You Use to Identify the Best Time to Buy Bitcoin?

Bitcoin is considered undervalued when the price is below both the 200-day average acquisition cost and the exponential growth fair value. Market trends and past price movements are also important reference points.

Why Is Bitcoin’s Price Cycle More Pronounced Than Other Crypto Assets?

As the oldest and most heavily traded crypto asset, Bitcoin draws the most attention and is subject to amplified crowd-driven price moves. Its well-established patterns and parabolic growth make its cycles clearer than those of other tokens.

What Risks Should You Consider When Buying Bitcoin?

Major risks include volatility, private key management, and network security. Use secure wallets and networks to mitigate these risks.

What Roles Do Technical and Fundamental Analysis Play in Bitcoin Investing?

Technical analysis projects trends from charts and trading volume, while fundamental analysis assesses Bitcoin’s intrinsic value and potential. Using both leads to better-informed decisions.

For Bitcoin, Is Dollar-Cost Averaging (DCA) or Timing Your Purchase Better?

DCA reduces the impact of volatility and suits long-term investors. Timing your entry can yield higher returns if you’re skilled, but it also carries greater risk. Choose based on your strategy and resources.