TL;DR: The halving-cycle approach ties investment decisions to the rhythm in which Bitcoin halves the miner block reward (about every four years). It is not a proven model: there are only a few cycles to learn from, and a past pattern need not repeat.
What can you expect?
- Time per week
- Little with monthly purchases: a few minutes a month plus a yearly review. The strategy runs over years.
- Starting capital
- An amount you can fully afford to lose. You can start small, for example €50 to €200 a month, depending on your provider's costs.
- Typical setbacks
- Falls of more than 70% lasting years, custody problems, and the temptation to sell in panic or buy more out of greed.
- Costs
- Costs per purchase or sale, spread, and costs for storing or transferring (network fees). Compare costs between providers.
- Not suitable if…
- Not for anyone who needs the money in the near term, cannot bear large price falls, or expects a return. That is not guaranteed.
How it works
Roughly every 210,000 blocks (about four years), the reward miners receive for a new block is halved: from 50 to 25 (2012), 12.5 (2016), 6.25 (2020) and 3.125 bitcoin (2024). Some investors time buying and selling around this cycle. Keep in mind that there have been only four halvings. That is too few to establish a reliable pattern, the halving schedule is known in advance and so already priced in, and earlier cycles also included price falls of more than 70% from the peak. Bitcoin has no deposit guarantee, and MiCA covers providers, not prices. The information here is educational and not investment advice.
Core principles
- 1. A pattern from four cycles is not a law; assume uncertainty
- 2. Spread purchases over time instead of picking one moment
- 3. Only invest money you can fully afford to lose
- 4. Set in advance when and why you buy or sell, so emotion plays a smaller role
Step-by- step plan
- 1
Decide how much you can afford to lose
Choose an amount you can lose completely without affecting your lifestyle or goals. Keep it small relative to your total wealth.
- 2
Choose a storage method
Choose how you hold your bitcoin (provider or own wallet) and weigh the risks. Read the wallet-security tutorial.
- 3
Spread your purchases
Buy in equal parts over a set period, for example monthly for a year.
- 4
Set your selling rules
Write down the circumstances in which you will sell part, for example at a certain goal or when your personal situation changes.
- 5
Review yearly
Check whether your plan still fits your situation, not after every price headline. Keep a record of purchases for tax.
In detail
What a halving is
Bitcoin has a fixed issuance schedule. Every 210,000 blocks, about every four years, the reward for new blocks is halved. Halvings took place on 28 November 2012, 9 July 2016, 11 May 2020 and 20 April 2024. The maximum supply is 21 million bitcoin.
The idea behind the approach: less new supply might support the price. But the schedule has been known for years, and the price depends on much more: demand, interest rates, regulation, market mood.
What four cycles do and do not tell us
After each halving came a period of strongly rising prices, followed by a sharp fall of more than 70%. That pattern is visible, but it is four observations. That is too few to know whether the halving was the cause or whether other factors (for example interest rates and liquidity) played a part. The pattern can change. The falls also lasted years.
Anyone who decides in advance to follow the cycle exactly is therefore taking a big gamble on a pattern that need not repeat.
On-chain data: a tool, not a crystal ball
Some analysts use data from the blockchain itself (such as the average acquisition price of existing coins) to judge market mood. Such data can give context, but they are opinions and models, not certainties. Different analysts often reach different conclusions. Treat them as one source of information.
Spreading and discipline
A simple approach is to set an amount and a period in advance and buy in equal parts (dollar-cost averaging). This avoids putting everything in at one moment, but it does not prevent loss. Also decide under which circumstances you will sell, and write it down. Without a plan, many people decide out of fear or greed.
- High risk tolerance and patience
- Knowledge of wallet security
- Money you can afford to lose
- Secure storage method (provider or wallet)
- Spreadsheet of your purchases
- Reliable source for market data
- 01 You have a fixed amount you can afford to lose and a set period to invest over
- 02 You buy in equal parts (for example monthly) rather than all at once
- 03 You know the risk of a fall of 70% or more
- 04 You have chosen a secure way to store it
- 01 You sell under rules set in advance (for example in steps at your own goals), not by feel
- 02 You review your plan when your personal situation changes, not on every price headline
- 03 There is no reliable signal for the top; therefore plan to sell in steps
Worked example
This is a hypothetical example with simple numbers. It is not a price forecast.
For 6 months you invest €200 each month, paying that month's price each time:
| Month | Price | Bought (BTC) |
|---|---|---|
| 1 | €20,000 | 200 / 20,000 = 0.0100 |
| 2 | €16,000 | 200 / 16,000 = 0.0125 |
| 3 | €25,000 | 200 / 25,000 = 0.0080 |
| 4 | €20,000 | 0.0100 |
| 5 | €16,000 | 0.0125 |
| 6 | €25,000 | 0.0080 |
Total invested: 6 x €200 = €1,200. Total bought: 0.061 BTC. Average purchase price: €1,200 / 0.061 = €19,672.
- At a price of €25,000: 0.061 x €25,000 = €1,525 (+€325, +27.1%).
- At a price of €8,000: 0.061 x €8,000 = €488 (-€712, -59.3%).
Recovery is hard too: after a 70% fall, €1,200 shrinks to €360. To get back to €1,200 the value must rise by 1,200 / 360 - 1 = +233%. Costs and tax are not included.
Hypothetical example, not advice.
Work it out yourself
Risks and risk management
- Limited data: only four halvings; statistically that says little
- The halving is known in advance and may already be in the price
- Falls of more than 70% happened in earlier cycles and can last years
- Custody risk: loss of access or hack, and no deposit guarantee
- Regulation and markets can change; MiCA covers providers, not prices
- Invest only a part you can fully afford to lose and keep it small relative to your total wealth
- Spread purchases over time and set a maximum amount in advance
- Store recovery phrases offline and use two-factor authentication with your provider
- Consult belastingdienst.nl for the tax rules that apply to you
Learn the basics
Key takeaways
- Bitcoin halves the block reward about every four years. That is a fixed schedule, but it says nothing certain about the price.
- With only four halvings, a price pattern is statistically weak. The past is no guarantee.
- Spreading purchases (for example monthly) reduces the chance of entering at a bad moment but does not prevent loss.
- After a 70% fall you need over +233% to recover. So invest only what you can afford to lose.
Frequently asked questions
Does the halving cycle apply to other crypto such as Ethereum? +
The halving is a feature of Bitcoin. Other crypto has a different issuance schedule. They often move with Bitcoin, but that is an observation, not a rule.
How much of my wealth may I put in this? +
That is a personal choice and not advice. Invest only an amount you can fully afford to lose, and keep it small relative to your total wealth.
Which free tools can I use? +
You can view market data on various data sites. Always check data against more than one source, and remember that analyses are opinions.
What if the pattern does not return at the next halving? +
It may not. With a small number of cycles that is a real possibility. Spread your purchases, invest only what you can afford to lose, and do not rely on a single scenario.
Origin
General technique