Bitcoin’s (BTC) latest halving event, which occurred on April 20, 2024, has brought a sobering revelation for crypto enthusiasts: the much-vaunted four-year cycle might be a thing of the past. Outlier Ventures, a prominent Web3 accelerator, has sounded the alarm that Bitcoin’s current price performance post-halving is the weakest on record.
In a recent report, Jasper De Maere, Head of Research at Outlier Ventures, argued that the four-year cycle—a phenomenon where Bitcoin historically experiences significant price movements following a halving event—is no longer a reliable market indicator. “Four months after the latest Bitcoin halving, we’re witnessing the worst price performance following any halving to date,” De Maere stated.
A Historical Perspective
Bitcoin halvings occur roughly every four years, reducing miners’ block rewards by 50%. This mechanism, designed to control Bitcoin’s inflation rate, has historically driven substantial price increases in the months following each halving. For instance, Bitcoin saw a staggering 739% rise 125 days after the 2012 halving, a 10% gain after 2016, and a 22% boost following 2020. Yet, according to De Maere, the current post-halving performance deviates sharply from these trends, showing an 8% decline.
Changing Dynamics
De Maere attributes this shift to the maturation of the digital asset market and a diversification of factors influencing Bitcoin’s price. The significance of the halving event in driving price movements has diminished since 2016, when it had its last substantial impact. “The halving no longer has a fundamental impact on the price of BTC and other digital assets,” De Maere asserts. He suggests that the halving’s influence on miners’ treasury management is now negligible compared to the broader market dynamics.
Interestingly, while Bitcoin’s halving might no longer be a game-changer, its psychological impact on the market persists. The 2020 halving, which coincided with unprecedented global capital injection and the rise of decentralized finance (DeFi), saw a significant price surge. However, De Maere points out that this was more a product of macroeconomic factors than the halving itself.
The ETF Factor
Another layer to this narrative is the role of spot Bitcoin exchange-traded funds (ETFs). Bitcoin reached a post-bear market all-time high of $73,836 on March 14, 2024, before the halving, driven partly by increased ETF approvals. De Maere argues that attributing this pre-halving rally solely to ETF approvals is misguided. “The spot Bitcoin ETF approvals were a demand-driven catalyst, while the halving is a supply-driven catalyst,” he explains.
Despite debunking the four-year cycle, De Maere is not bearish on the overall market. He emphasizes the importance for founders and investors to understand evolving market drivers to better predict fundraising opportunities and navigate the crypto landscape.
In conclusion, as Bitcoin and the broader cryptocurrency market continue to evolve, it’s clear that traditional models and cycles are becoming less reliable. The latest data suggests a need for fresh perspectives and strategies in understanding and capitalizing on digital asset trends.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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