The next halving is coming quickly and as we have already seen, Bitcoin is setting itself up for a massive surge. Even in just the past few weeks over the end of April and through early May, Bitcoin has blown past some key resistance levels in the lower $10,000’s. But if Bitcoin continues to pump over this year to new highs how do you know when to Sell BTC?
Let’s dive into some key price levels that I think will be clear sell indicators, and what Bitcoin price could look like in the coming years.
Nothing should be considered investment or financial advice. Enjoy the ride.
Bitcoin Halving Price Movements
Bitcoin historically has always pumped upward after the halving since the early days of the digital asset. It is a very strong possibility that the same thing will happen again here in 2020 and into 2021. This is due to many reasons, but the most intuitive ones are due to the circulating supply changes and mining competition.
Bitcoin circulating supply
While there will be a total of 21 million Bitcoins in existence eventually, it will take time. Until then, Bitcoin is released through block confirmations as an incentive to protect the network, and confirm transactions. These rewards are diminishing every 4 years to create a tighter market as fewer and fewer Bitcoin get released.
You can imagine that as the market grows and more people look to purchase Bitcoin, the supply must meet to the demand. Although, as these avenues for purchasing Bitcoin start to become more scarce, the price will inevitably have to grow to compensate for this. With each halving the demand for Bitcoin has continually grown and therefore the price has had strong upward pressure due to the diminishing supply.
In addition as more people, banks, and even governments start to hold Bitcoin as reserves, this will only further diminish the circulating supply on the market for traders, purchases and daily transactions.
Another way to look at this is as the circulating supply is cut, there will be less Bitcoin being sold on the market. With Bitcoin being primarily a market driven asset, there will be fewer sell orders compared to buy order creating a hole for the Bitcoin price to punch through similar to the end of 2017 where we saw Bitcoin explode from $10,000 to $20,000 with little to no resistance.
BTC Miners Control the Wholesale Price
While the circulating supply is squeezing the public order book, it will all stem from the miners desire to stay afloat and beat out the market. Right now, Bitcoin is still a few thousand dollars away from most mining companies staying profitable after the halving.
This means that after the rewards are cut in half, most mining companies will have to increase their wholesale and over the counter prices for BTC or simply hoard the asset until the market forces the price upwards to profitable levels.
The alternative would be that mining companies slowly shut down while the largest ones slowly gain more of the market and newer firms with enough backing can enter the scene as well. More than likely, Bitcoin will start to surge to compensate for the lack of profit. It typically happens over 12 to 24 months, but it is a steady increase from what we have seen historically.
When to Sell Next Bull Market
With that frame of reference, we will more than likely see another exponential increase in the BTC price at some point. The question is not so much if, but when. At that point, what would be a reasonable price to sell your precious Bitcoin at?
Bitcoin Sell Signals
If you could perfectly time the bottom and the top of each market, then you would probably be the richest person on Earth. Unfortunately, that is not possible. All you can do it be patient and sell when you are most comfortable. Not all prices are guaranteed, but there are some that are more likely than others.
For myself, I look at where the Bitcoin market cap should be compared to the rest of the world’s similar assets. While Bitcoin is unlike any other physical asset in the world in theory, the markets behind the assets will behave uniformly to some degree.
Looking to where Bitcoin’s market cap is, I personally think it is way below where it should be. Sitting between $150 to $200 billion, this is tiny compared to most markets across the world. Then where should Bitcoin be about?
The Bitcoin price my models have spit out, and numerous other people seem to agree with are between $30,000 to $50,000 this coming bull run. Again these are projections based on historical data and assumptions, but they seem rather conservative compared to previous bull runs.
Therefore my PERSONAL levels to sell Bitcoin, or at least half of my stash, are between these values.
When to Sell BTC
That means, if BTC surges as we all expect, then I am looking for these key levels starting at $30,000. Assuming of course you believe these projections.
Once Bitcoin breaches that level, I will set sell orders if the price starts to dip between a 5% to 10% range. That means, Bitcoin could push to $35,000 and drop back to $34,000 but I won’t sell. But if Bitcoin pushes to $35,000 and drops back around $32,000, I would sell.
It is all about comfort. Likewise, once Bitcoin pushes to $30,000 I would sell if it drops somewhere around $28,000 just to be safe from losing most of it’s value. Bitcoin is extremely volatile and at those inflated price levels, the price could bound upwards of $5,000 to $10,000 in a single day. Likewise, it could also bound downwards the same amount. Protect the value of your portfolio is all I can recommend to anyone in this market.
That may sound extreme, but it has happened before. Remember that at these extended price levels, there is almost no resistance one way or the other. The price is extremely easy to manipulate, and people will take advantage of that.
In other words, make sure to stay extremely active in this next bull market. If this one is anything like 2017, you will have less than a few hours to sell Bitcoin at it’s peak. The price will move extremely fast, and you can only hope that the platform you are selling on is well functioning enough to support the massive amount of users that will be trying to sell at the peak along with the other people FOMO-ing in all the way up.
Before this next run, make sure to whitelist your Bitcoin addresses to sell your digital assets, protect your accounts, and stay active every single day. There is no telling when the spikes could occur, so your best bet is watching the market daily.