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Writer's pictureSimon Luk

Navigating the Optimal Timing for Investing in Digital Asset Funds


Author: Simon Luk - Manager of Digital Asset Funds and Independent Director at Various Public Companies


Amid the increasing volatility of the cryptocurrency market, investors frequently face the decision of whether to enter the market during a downturn. Recently, many digital asset funds have experienced monthly declines, presenting both challenges and opportunities for investors. Here are some insights to help investors consider the feasibility of buying into digital asset funds at this time.


Market Volatility and Timing

The digital asset market is highly volatile, with prices often swinging dramatically due to changes in market sentiment, policy shifts, or technical issues. A market downturn does not necessarily indicate a fundamental issue with the funds but could merely reflect short-term adjustments.

For those who are optimistic about the future of digital assets, buying during a market downturn can be seen as an opportunity for long-term investment. This approach could yield higher returns when prices rebound. The fourth Bitcoin halving in 2024 marked a significant change in Bitcoin's supply structure, and its impact on the market is noteworthy. Below, we explore why the current price level might be a good opportunity for long-term investment.

Bitcoin Halving and Price Cycles

Bitcoin halving is a significant event in the Bitcoin network that occurs approximately every four years. This event halves the Bitcoin reward for miners, thereby reducing the supply of new Bitcoins. Historically, each halving event has been followed by a notable price increase, often reaching new highs. Here are some key points on Bitcoin halving and its impact on prices:

Historical Halvings

  • First Halving (November 2012): Reward reduced from 50 BTC to 25 BTC. Approximately one year later, Bitcoin's price skyrocketed from around $12 to over $1,000.

  • Second Halving (July 2016): Reward reduced from 25 BTC to 12.5 BTC. Within 18 months, Bitcoin's price rose from about $600 to nearly $20,000.

  • Third Halving (May 2020): Reward reduced from 12.5 BTC to 6.25 BTC. In the months following, Bitcoin's price increased from around $8,000 to over $60,000.

  • Fourth Halving (April 2024): Reward further reduced to 3.125 BTC.


Supply and Demand Theory

The halving events reduce the supply of new Bitcoins. If demand remains steady or increases, theoretically, prices should rise. With Bitcoin's growing adoption and the entry of institutional investors, demand could further increase.


Market Sentiment

Market sentiment also plays a crucial role following a halving event. Investor expectations and market confidence can drive price increases. Additionally, media coverage and discussions on social media can influence prices.


Bitcoin's halving events have historically been closely linked to price increases, with each event potentially setting new price records. However, this does not guarantee that the trend will continue. Investors should carefully analyze the market situation and make wise investment decisions based on their own risk tolerance.


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