Why the bitcoin price will no longer “work” as it has in past four-year cycles of rise and fall
Bitcoin no longer “obeys” four-year price cycles, showing the worst quote dynamics in its history in terms of such cycles. Analysts at Outlier Ventures noted that halving no longer has any fundamental significance, having only “some” psychological effects.
125 days after each halving, the bitcoin price has shown an increase: up 739% 125 days after the 2012 halving, 10% in 2016, and 22% in 2020. But this time, after the halving in 2024, the price fell 8%, according to Outlier Ventures.
Each time between the four-year halving cycles, the bitcoin price has renewed a new high, surpassing the past record by several times. For example, in late 2013, about a year after the halving cycle, bitcoin reached $1.2k. The high of the next market cycle at the end of 2017 was $20k per bitcoin, bitcoin soared to $69k in late 2021 before the price showed a corrective movement.
The year 2024 was unique - bitcoin exceeded the previous high for the first time before the halving occurred, when the BTC price rose to $73k in March (the halving was in April). It is believed that a strong driver of the price rise was demand from the US bitcoin spot exchange-traded funds (ETFs) launched in January, which buy bitcoins from the market to back stocks.
“Halving is not having a significant impact on the price of bitcoin and other digital assets. It's time for entrepreneurs and investors to move away from the idea of a four-year cycle as the digital asset market matures,” said Outlier Ventures head of research Jasper De Maire.
Outlier Ventures believes that mainstream cryptocurrency network inflation has been negligible since 2016 in the context of a maturing and more diversified cryptocurrency market. Despite the strong price momentum after the 2020 halving, De Maire considers it a coincidence. That growth cycle was not due to halving. It was due to an unprecedented injection of capital by central banks around the world, when the US alone increased the money supply by more than 25% in one year.
However, there are other calculations regarding the “halving effect” that point to a 150-day period instead of the 125 days announced by Outlier Ventures analysts. Experts from K33 believe that bitcoin still shows signs of correlation with the second and third cycles. And the growth began after about 150 days, that is, only at the end of September.
And halving is only part of the economics of bitcoin, which has limited issuance. Many investors and other market participants follow Hodl's concept of a long-term passive investment strategy. And in which investors maintain a relatively stable portfolio over time, regardless of short-term price volatility.
In addition to low inflation rates, the main cryptocurrency's network has already mined more than 94% of all coins, or 19.75 million BTC ($1.125 trillion). This means that bitcoin miners have only 6%, or 1.25 million BTC coins, left to create.
