Looking back at the trend chart of Bitcoin after the halving in 2020, we can find that after the halving, the difficulty of mining Bitcoin has increased due to the reduction in supply.
On the day of halving, the price bottomed out and rebounded, and then it started to rise all the way, rising from around 10,000 US dollars to a high of 69,000 US dollars in 2021.
Let’s review
What are the important events in the rise of Bitcoin from 2020 to 2021?
1. Bitcoin's third halving: On May 12, 2020, Bitcoin completed its third halving event in history, with the block reward reduced from 12.5 BTC to 6.25 BTC. This event is widely expected to reduce Bitcoin's supply growth, which could push up its price.
2. Global macroeconomic environment: The 2020 coronavirus pandemic has led to increased global economic uncertainty. Many countries have implemented loose monetary policies, increasing market demand for safe-haven assets such as Bitcoin.
3. Participation of institutional investors: In 2020, Grayscale, the world's largest digital currency asset management company, significantly increased its BTC holdings, marking the beginning of institutional investors' interest in Bitcoin.
4. PayPal supports cryptocurrency transactions: On October 21, 2020, payment giant PayPal announced that it would allow cryptocurrency transactions and shopping on its network, increasing the mainstream acceptance of Bitcoin.
5. The rise of DeFi (decentralized finance): In 2020, the rapid development of the DeFi field attracted a large amount of funds into the crypto market, indirectly driving up the price of Bitcoin.
6. Tesla invests in Bitcoin: On February 8, 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin and expressed its intention to accept Bitcoin payments. This news greatly pushed up the price of Bitcoin.
7. Development of Bitcoin Lightning Network: In 2021, the rapid development of Bitcoin Lightning Network has enhanced the maturity of Bitcoin as a transaction medium and improved its payment capabilities.
8. China's regulation of Bitcoin mining: In May 2021, China's State Council Financial Stability and Development Committee meeting called for a crackdown on Bitcoin mining and trading activities, which led to a decline in the computing power of the entire Bitcoin network. However, the computing power then migrated to North America, and the United States surpassed China to become the world's largest source of Bitcoin mining activities.
9. Approval of Bitcoin ETF: On October 15, 2021, the approval of the Bitcoin futures ETF injected new vitality into the market and attracted a large amount of funds from mainstream and institutional investors.
These events combined to drive Bitcoin’s strong performance from 2020 to 2021, making it one of the best performing assets of the year.
Summary: The above highlights, the influence of large institutions entering the market to buy Bitcoin, and the continuous release of money have led to the super bull market variables of Bitcoin.
So will the upward trend repeat after the halving in 2024?
In fact, to understand whether it will rise or not, you only need to think in three dimensions, and you will be more confident than others!
First: From a policy perspective, the Bitcoin spot ETF has been approved. More countries will approve it in the future, including South Korea, Japan, etc. There is no need to worry about the increase.
Second: The supply side of Bitcoin has become less and less after the halving, right? This is an ironclad fact.
Third: On the funding side, the timetable for the Fed’s interest rate cuts is basically determined. Although there are still some uncertainties, it is not far away.
Based on the above reasons and logic, will you throw away your chips in a panic again?
Definitely not. For those friends who have sufficient funds, the decline will give you the opportunity to make excess profits.
The above content does not constitute any investment advice and is for learning and review reference only.
