Bitcoin’s four-year halving event influence is diminishing

Bitcoin’s four-year halving cycle appears to be losing its impact, as BTC prices show little response following the April 2024 halving. ⁤⁤Historically, halving events have driven significant price surges, but this time around, BTC’s post-halving performance has been the weakest yet. ⁤

At the time of writing, Bitcoin was trading nearly 10% below its April 20th halving-day price of $63.8k, raising doubts about the continued significance of the halving cycle. Outlier Ventures even declared the cycle “dead,” arguing that these events no longer play a major role in driving BTC price movements.

However, at that time, the anticipation of the halving event was not the sole cause of the price surge. On January 11, 2024, the approval of Bitcoin ETFs significantly fueled the rise in BTC prices, with over 299,000 BTC of net inflow. The Bitcoin ETFs approval also drove BTC’s demand, resulting in the 100-day run-up of epoch 5, outperforming the average epoch run-up by 17%.

The post-halving period tells a different narrative despite the successful pre-halving price surge. Four months after the halving, BTC still recorded the lowest price performance following any halving. At the time of writing, BTC’s price was $57,251, representing a 10% drop from the price on the first halving day.

The 2016 halving had the most significant impact on BTC prices

After 2016, BTC price changes were influenced more by factors other than the halving event. The most recent price surges before and after the halving were mainly influenced by the Bitcoin ETFs approval, while in 2020, the post-COVID capital influx played a critical part. 

In 2020, multiple countries were obliged to print more money to cover the impact of COVID-19. For starters, the US alone rocketed its money supply by 25.3%.

Thus, the augmented money supply significantly affected Bitcoin prices, with BTC increasing about 6.6 times in the first year after the halving. 

Therefore, 2016 marks the last halving that substantially impacted the Bitcoin market. Jasper De Maere, Outline Ventures Research Lead, wrote: “We believe that 2016 was the last time the halving had a significant, fundamental impact on BTC price action. Since then, the size of the miners’ BTC block reward has become negligible in the context of a maturing and increasingly diversified crypto market.”