Compared with the previous halvings, Bitcoin’s fourth halving has the following significant differences:
1. Market expectations and pricing:
Partially expected market reaction: Deutsche Bank pointed out that the market has partially anticipated this halving, which means that investors and market participants may have already reflected the impact of this important event in the price trend before the halving. Therefore, compared to the significant price increases that may have occurred during previous halvings, there will not be a significant price increase after this halving.
2. Changes in correlation with traditional financial markets:
Weakened correlation: Since the FTX crisis in 2022, the correlation between Bitcoin and major US stock indices such as the S&P 500 and Nasdaq has weakened significantly, with correlations of only 16% and 15% respectively in 2024. This means that Bitcoin price movements show greater independence from traditional financial markets, and the impact of halving events on broader financial markets may be limited.
3. Macroeconomic environment and policy factors:
Expected external factors: Bitcoin prices are expected to remain high after the halving due to expected Ethereum spot ETF approvals, potential interest rate cuts from major global central banks, and changes in the regulatory environment. These external factors may not have been so prominent in previous halving events, indicating that the macroeconomic and policy environment in the context of this halving has a more significant impact on market expectations.
4. Mining ecological adjustment:
- Miner behavior and profitability: As the miner reward is halved to 3.125 BTC after the halving, some miners may be forced to shut down their equipment or switch to other currencies (such as Bitcoin Cash or Bitcoin SV) due to reduced profits, causing the hash rate of the Bitcoin network to drop sharply. This may affect the security and stability of the Bitcoin network in the short term, and the structure and distribution of the miner group may also change.
5. Technological progress and competition:
Impact of Bitcoin Cash: Bitcoin Cash (BCH), a variant of Bitcoin, completed its own halving in April 2023, and its price subsequently rose. Bitcoin Cash may be more attractive to some miners due to its larger block size and faster transaction verification speed, especially when cost-effectiveness becomes a key consideration after the halving. This suggests that the competitive relationship between Bitcoin and its forked coins may be more complicated in the context of the fourth Bitcoin halving.
The differences of Bitcoin’s fourth halving are mainly reflected in the market’s expectation management of halving, the weakening of correlation with traditional financial markets, the impact of specific macroeconomic conditions and policy expectations, the deep adjustment faced by the mining ecosystem, and the changes in the relationship with competing currencies (such as Bitcoin Cash). These differences reflect the maturity and complexity of the Bitcoin ecosystem and its market environment after experiencing multiple halvings.
