The (Bitcoin Reserve Act) may break the four-year price fluctuation cycle of Bitcoin and even become a significant transformation in the history of cryptocurrency; will the familiar 'halving cycle' change as a result?
More and more analysts are beginning to predict that once President Trump takes office, he may sign an executive order on his first day to promote the establishment of a Bitcoin reserve or implement this plan through legislation. What impact would this initiative have on the crypto market? Many believe this could be the starting point of the cryptocurrency super cycle.
Since Wyoming Senator Cynthia Lummis proposed the (Bitcoin Reserve Act), other states, such as Texas and Pennsylvania, have also begun to follow suit. Furthermore, countries like Russia, Thailand, and Germany are also considering similar policies.
This series of actions is sparking global discussions about Bitcoin reserves, and the pressure is increasing.
Can we bid farewell to the traditional halving cycle?
If more and more countries decide to adopt Bitcoin as a reserve asset, could we say goodbye to the traditional halving cycle and enter a brand new market era?
Halving Cycle
A common phenomenon in the Bitcoin market refers to the event where the Bitcoin block reward (the Bitcoin reward miners receive for mining) is halved every so often. This event usually has a profound impact on the supply of Bitcoin and market prices, thereby forming a relatively fixed 'cycle.' Bitcoin halving events occur approximately every four years.
The total supply of Bitcoin is limited to 21 million Bitcoins. To control the rate of Bitcoin issuance, block rewards are halved regularly.
Block reward halving: Bitcoin's block reward is the Bitcoin reward miners receive after solving mathematical problems using the Proof of Work (PoW) algorithm. Initially, this reward was 50 Bitcoins. After every 210,000 blocks (approximately every four years), it is halved. The result of this halving is a reduction in the supply rate of Bitcoin.
Historical halving events:
November 2012: The first halving, reducing the reward from 50 Bitcoins to 25.
July 2016: The second halving, reducing the reward to 12.5 Bitcoins.
May 2020: The third halving, reducing the reward to 6.25 Bitcoins.
2024: The fourth halving, reducing the reward to 3.125 Bitcoins.
Why is there a halving cycle?
Inflation control: One of Bitcoin's original intentions is to prevent inflation. By reducing block rewards and controlling the issuance of Bitcoin, it ensures that Bitcoin does not depreciate like fiat currencies due to over-issuance.
'Scarcity' effect: Halving increases the scarcity of Bitcoin, theoretically enhancing its value, especially in the case of sustained demand.
Many analyses and predictions in the cryptocurrency market revolve around this cycle, believing that after each halving, the Bitcoin market may welcome a new bull market or super cycle.
Nexo analyst Iliya Kalchev believes that once the (Bitcoin Reserve Act) is passed, it will become a milestone in Bitcoin's history. This means that Bitcoin is not just a speculative tool; it is expected to officially become part of the global financial market.
'Every time Bitcoin's price fluctuates, someone says 'this time is different,' but the current situation is indeed unprecedented,' he said. 'The cryptocurrency market is now welcoming a pro-crypto U.S. president, and the situation in Congress is also more favorable than ever.'
According to the bill proposed by Cynthia Lummis, the U.S. plans to purchase 200,000 Bitcoins annually over five years, ultimately accumulating to 1 million Bitcoins, and will keep it as a strategic reserve for at least 20 years.
Jack Mallers, founder and CEO of Strike, believes that Trump is likely to procure Bitcoin through an executive order, but he also points out that this does not mean that 1 million Bitcoins will be purchased immediately.
Dennis Porter, co-founder of the Satoshi Act Fund, also stated that Trump's team is considering establishing a strategic Bitcoin reserve through an executive order.
Although the Trump team has not confirmed whether this executive order will be issued, Trump stated in an interview with CNBC that if the U.S. is to establish a Bitcoin reserve similar to the Strategic Petroleum Reserve, 'I think it is possible.'
However, executive orders often lack long-term stability, as subsequent governments may revoke their predecessors' decisions. Therefore, to ensure the long-term existence of Bitcoin reserves, the best approach is to promote it through legislation.
Due to the Republican Party's dominance in Congress and its slight majority in the Senate, Bitcoin supporters within Trump's team have ample reason to push for this bill.
However, some Republicans may oppose this proposal due to pressure from progressives, believing that the bill hands over government wealth to Bitcoin holders, which could complicate the bill's passage.
With the advancement of the (Bitcoin Reserve Act), we may see more countries and institutions participating in this cryptocurrency competition, leading to profound changes in the market landscape. In the future, Bitcoin will no longer merely be an investment tool; it may truly become part of the global economic system, ushering in a brand new era.
This time is different
At the beginning of this month, Alex Krüger, founder of macro digital asset consulting firm Asgard Markets, stated that the election results made him believe 'Bitcoin is very likely to enter a super cycle.'
He compared the situation of Bitcoin to gold, noting that since the U.S. abandoned the gold standard, the price of gold has soared from $35 per ounce to $850, demonstrating similar potential.
Although Krüger believes that Bitcoin may still experience a bear market in the future, he particularly reminds, 'This cycle may not necessarily be the same as the past; we may see some different changes worth looking forward to.'
In his view, the uniqueness of Bitcoin and market conditions are significantly different from before, especially against the backdrop of policy support, Bitcoin's trajectory may usher in a new chapter.
The Trump administration's actions further indicate that government policies are gradually leaning towards supporting cryptocurrencies. With Gary Gensler's departure, Trump appointed Paul Atkins, an expert who has long supported cryptocurrencies, as the chair of the U.S. Securities and Exchange Commission (SEC), which undoubtedly brings new hope to the crypto industry.
In addition, he also nominated Scott Bessent as Secretary of the Treasury, known for his support in the cryptocurrency field, and is expected to promote more open financial policies.
Moreover, Trump has appointed former PayPal COO David Sacks as the cryptocurrency czar, responsible for developing a clearer legal framework for the crypto industry and further stabilizing and developing this emerging market. These initiatives reflect a more favorable policy environment, undoubtedly providing unprecedented development opportunities for Bitcoin and the cryptocurrency market.
As government policies gradually shift, the future cryptocurrency market may welcome a more mature and stable phase. As many analysts say:
'This cycle is not just about market fluctuations after halving, but may rather be a structural transformation of the entire cryptocurrency industry.'
The fate of cryptocurrency is being redefined by policies and global economic conditions, and the future is filled with more possibilities.
How does the global cryptocurrency market choose the right platform?
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Super cycle is not so super
Is this really different this time? Every Bitcoin bull market is accompanied by voices claiming 'this time is different,' yet these voices have not materialized in past cycles.
From 2013 to 2014, market forecasts predicted that Bitcoin would become an alternative to global fiat currencies, but this expectation did not lead to a super cycle. Subsequently, during the 2017 to 2018 cycle, the interest from mainstream financial institutions and institutional investors was seen as a significant marker for Bitcoin's entry into a super cycle; however, ultimately, the market not only failed to sustain its rise but also experienced a severe crash, causing significant losses for many investors.
By the 2020 to 2021 cycle, with well-known tech companies like MicroStrategy, Square, and Tesla entering the Bitcoin market, it was generally believed that this trend would lead to more tech giants following suit, resulting in unprecedented market confidence.
However, reality disappointed once again, especially after the bankruptcy of 3AC (Three Arrows Capital), which severely damaged confidence in the entire cryptocurrency market, followed by a collapse that caught everyone off guard.
These failed super cycle theories have left many investors feeling confused. For Chris Burniske of the venture capital firm Placeholder, the Bitcoin super cycle seems to be nothing more than a collective illusion; however, as the market matures and policy support increases, everything may be quietly changing.
All these differences may come from the support of the Trump administration. The change in the political landscape of the U.S. has brought unprecedented opportunities for Bitcoin. The proactive measures taken by the Trump administration to promote the legalization of cryptocurrencies and policy stability have broken the previous patterns of cyclical volatility. With more government policies and financial institutions' support, the Bitcoin market may welcome a new dawn.
Bitcoin may no longer solely rely on halving cycles and natural market fluctuations, but may gradually form a new cycle driven by government support, institutional participation, and the global economic environment. This new market structure could be more stable and sustained than ever before.
As global attitudes toward Bitcoin shift, many analysts have become optimistic about Bitcoin's potential in the future, seeing it as more than just a digital asset, but as an important component of the global financial system. If the U.S. and other governments adopt similar measures, it would not only accelerate the adoption of Bitcoin but also drive the market towards a more mature and stable direction.
Therefore, this time's 'super cycle' may really be different from the past. It may no longer just be a vague vision, but a reasonable speculation based on stronger policy support and a more stable market environment. The cryptocurrency market is becoming more rational and mature, and a new cycle has quietly begun to unfold, filled with possibilities.
Institutional entry will change market pace
If countries and large institutions begin to actively participate in Bitcoin purchases, it could trigger a fundamental revolution in the market. With the entry of institutional investors, the dynamics of the market, investor psychology, and the way they react to market events will significantly change.
Nexo analyst Kalchev pointed out that although the (Bitcoin Reserve Act) may break Bitcoin's four-year halving cycle, more importantly, with the influx of institutional investors, the traditional behavior patterns of the market will also change.
Unlike retail investors who are usually affected by the severe fluctuations of market sentiment, institutional investors pay more attention to risk management and capital stability, so their entry may lead the market towards a more stable and rational trend.
With the influx of institutional funds from Wall Street and others, the Bitcoin market may enter a more stable period. Because these institutional investors have advanced risk management strategies, their investment behaviors may reduce excessive market volatility.
This means that future bear markets in the Bitcoin market may not be as severe as in the past, but rather gradually trend towards stability, even becoming more rational.
These changes may not only lead to different performances in the Bitcoin market in the short term but may also lay a new foundation for its long-term development. With institutional funds pouring in, the cyclical changes in the market may gradually no longer rely on traditional halving cycles and other internal mechanisms.
Bitcoin's price fluctuations may increasingly be influenced by external factors such as policy changes and global economic fluctuations, rather than being solely dominated by technical halving events.
This change may herald the maturity of the Bitcoin market—a more diversified, rational, and less emotionally driven market. With the entry of these new investors and funds, Bitcoin will gradually become one of the core assets of global investors, and its market performance will be more profoundly influenced by macroeconomic and policy environments.
