Cryptocurrency advocates are no doubt waiting with bated breath to see if Bitcoin can hold onto its recent highs. They’re even starting to measure it against gold's performance. According to the halving cycle theory, Bitcoin’s price has been largely chained to its previous halvings, which take place about every four years. The previous Bitcoin halving occurred in April 2020. Historically, this cycle creates a bull market and impressive total returns in the following 12 to 18 months. The only question now is whether a cycle as robust as the last Bitcoin one could be sustained.
As you may know, bitcoin has a highly predictable four-year cycle, and that gives way to boom and bust times. This bullish cycle is intimately connected to its historical halving events. These events increase the difficulty of creating new Bitcoin, thus halving the supply. The hype leading up to these halvings, and the resulting aftermath, has created enormous upward price volatility in Bitcoin’s history.
Halving's Impact on Bitcoin's Price
Historically, Bitcoin’s halving events have had a huge impact on its market behavior. Through history, any time the rate of new Bitcoin creation is reduced, demand increases. So instead, prices have to shoot up precipitously. The previous halving occurred in April 2024. Orphan analysts are indeed closely tracking its positive impact to see whether it will trigger a new frenzy of bullish follow-on investment.
These rules were implemented during a crypto boom where Bitcoin reached a then all-time high of $69,000 in November 2021. Historical data from the past three Bitcoin cycles indicates that halvings act as catalysts for powerful bullish price action. This usually goes in a 12- to 18-month window, leading to significant market increases. Whether this pattern continues to be the case or not, Bitcoin is likely to continue to see a speculative rush of buying activity through November.
If all this bullish activity plays out over the full 18-month period, Bitcoin investors could be in for a massive windfall. This would mirror past boom and bust cycles known as when the cryptocurrency climbed “to the moon.” Each of these cycles have unique characteristics, including periods of needed correction. Commonly referred to as a “blowoff top,” in these instances prices quickly decline after a market tops out.
Trade Deals and Economic Factors
Yet, the bigger economic picture, not to mention geopolitical events, are equally important in determining Bitcoin’s value. And as the first trade deal surfaced, the euphoria in the crypto market—including Bitcoin—was noticeable. As a result, the U.S. trade agreements, especially with Great Britain as well as with a central Asian trading partner, could drive up the value of Bitcoin.
The Federal Reserve Chairman's warning of slowing economic growth and higher prices as a result of tariffs may affect Bitcoin. Retooling dozens of new trading deals signed within the next 60 days. If it’s not, any appreciation in Bitcoin will be more than erased very quickly.
Bitcoin, like gold, has been increasingly viewed as a safe haven asset during periods of economic and geopolitical turmoil. This perception can greatly increase demand for Bitcoin as investors become attracted to it by wanting to hedge against risk to their investments in traditional markets.
Bitcoin vs. Gold
Bitcoin has increasingly been held up as an alternative to gold, the traditional safe haven asset. This year, gold has outperformed Bitcoin, prompting discussions about whether Bitcoin can truly replicate gold's stability and reliability during economic turmoil.
Bitcoin has arguably established itself as a store of value, but its pronounced price volatility is still a major deterrent for many investors. Gold’s longstanding history and reputation. Individuals tend to see it as a safe haven during inflationary times and economic distress.
Bitcoin’s standing as a safe haven asset was still forming. Its triumph over gold will only be proven by its ability to deliver in the next economic crisis. Whether Bitcoin can maintain its value and attract investors seeking stability remains to be seen.
