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Bitcoin halving cycles no longer affect its price

GrafaGrafa2024/09/05 03:15
By:Liezl Gambe

A recent report from Outlier Ventures, authored by Jasper De Maere, Research Lead, suggests that Bitcoin's (CRYPTO:BTC) four-year halving cycle no longer has a significant impact on its price.

The report, titled "Token Trendlines," argues that the influence of the halving events on Bitcoin's price has diminished as the cryptocurrency market has matured.

De Maere states, “We believe that 2016 was the last time the halving had a significant, fundamental impact on BTC price action.”

He explains that the reduced size of Bitcoin block rewards for miners has become less relevant in a more diversified and evolving market.

The report challenges the traditional belief that halving events are a primary factor in predicting Bitcoin's price movements, asserting that "the four-year cycle is dead."

De Maere also suggests that the strong performance of Bitcoin and the broader crypto market following the 2020 halving was largely coincidental.

He points out, “The strong BTC and crypto market performance following the 2020 halving is coincidence, as the 2020 halving occurred during a period of unprecedented global capital injection post-Covid, with the U.S. alone increasing its money supply (M2) by 25.3% that year.”

This suggests that macroeconomic factors, such as increased liquidity in global markets, played a more significant role than the halving event itself.

The report also distinguishes between the impacts of Bitcoin Exchange-Traded Funds (ETFs) and halving events.

It states, “The BTC ETF approval is a demand-driven catalyst, while the halving is a supply-driven catalyst, making them not mutually exclusive.”

De Maere concludes, “While the halving may have some psychological effects, reminding bag holders about their dusty BTC wallets, it’s clear that its fundamental impact has become irrelevant.”

He emphasises that investors should "focus on more significant macroeconomic drivers rather than relying on the four-year cycle."

The report urges a reassessment of Bitcoin’s price dynamics, advocating for a focus on broader economic conditions rather than historical halving cycles to predict future movements.

At press time, the Bitcoin (BTC) price was $57,721.96.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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