Many traders have traditionally seen Bitcoin’s halving event as a predictable indicator of a looming price rally. In 2024, however, the cycle broke away from its precedent. For the first time, Bitcoin’s price surged before rather than after the halving episode.
Derivatives trading experts have told BeInCrypto that the pre-halving price rally will likely become a recurring feature of future cycles. As Bitcoin has integrated itself into mainstream finance and gained significant interest from institutional investors, the predictable, retail-driven cycles of the past are being replaced.
The Four-Year Cycle’s Fading Grip
Since the dawn of Bitcoin, the asset has abided by a traditional four-year cycle of price movements. Upholding itself to Satoshi Nakamoto’s principles of maintained scarcity and controlled inflation, this halving event cuts the reward for mining new blocks in half.
During past cycles, like in 2016 and 2020, Bitcoin’s price would typically experience a rally leading up to the halving. The all-time high was always reached in the months following this event.
However, this significant supply shock is starting to change. In the last halving episode of 2024, Bitcoin’s price hit a new all-time high, weeks before the expected event in April.
While the traditional strategy was to “buy the dip” during the bear market and wait for the post-halving bull run to reach a new peak, last year’s phenomenon broke away from the established playbook.
The change is unsurprising. Bitcoin has undergone massive changes since its creation in 2008. The real-world demand it now has from major financial players worldwide can partially explain its break from predictability.
What Caused Bitcoin’s Unprecedented Pre-Halving Peak?
The unprecedented pre-halving peak in March 2024 wasn’t a result of the typical retail-driven excitement. Instead, it was a powerful demand shock orchestrated by a new class of investors.
Gordon Grant, former Managing Director at Genesis and expert in cryptocurrency derivatives trading, refers to these large, sophisticated entities as “top-tier” allocators.
This group of investors, including corporate treasuries and other institutional funds, is making its first-ever allocations to Bitcoin at historically high prices.
Unlike retailers, their strategy isn’t short-term speculation but long-term accumulation.
“The top tier of allocators… has gone from those who put fiat into the assets in years prior to those who may be making their very first allocations to the asset at current prices, i.e., [publicly traded company] ‘treasuries’ which are raising funds often via converts and equity pipes… explicitly to pump liquidity into operating business… to gather the relevant cryptocurrency in the hopes of obtaining a multiple to the [Net Asset Value],” Grant told BeInCrypto.
In simpler terms, these firms see Bitcoin as a long-term HODL asset. Their goal of compounding their holdings as quickly as possible represents the highest form of Bitcoin’s integration into the traditional financial system.
“In some sense [this] represents an approach to the apotheosis of the financialization of the digital commodity,” Grant added.
In this new market reality, the pre-halving peak directly resulted from institutional demand. The influx of capital from these powerful allocators created a sustained buying pressure that pushed Bitcoin’s price to new highs well before the halving could create its traditional supply shock.
This shift also represents changes in the signals traders and investors use to predict future market movements.
The End of a Predictable Indicator
Historically, Bitcoin halving was a powerful indicator for retail investors. Knowing that the event would cut the supply of newly minted Bitcoin in half, investors anticipated a predictable supply shock.
The cycle was a core aspect of the Bitcoin investment narrative, influencing market psychology and driving boom-and-bust periods. However, this predictable pattern is no longer a reliable indicator.
According to Grant, the market has matured, and the halving’s effect is now valued more effectively.
“As is true with other alpha signals in many markets, the signaling around the halving has begun to be pre-traded, anticipated and more efficiently factored into investment decisions,” he said.
In short, sophisticated institutional investors no longer wait for the halving event. They understand the supply shock narrative and have accumulated Bitcoin in advance.
This pre-trading activity has eroded the halving’s power as a surprise catalyst. As a result, the market, now dominated by investors armed with advanced market analysis, is more efficient, less volatile, and less reactive to the halving itself.
“Bitcoin is driven much by the global liquidity cycle than the halving cycle these days,” Joshua Lim, Global Co-Head of Markets at FalconX, told BeInCrypto.
This phenomenon shifts the focus from a pre-programmed event to broader economic forces.
From Uncorrelated to Intertwined
With the influx of institutional capital, Bitcoin is no longer an isolated asset. It has become a macroeconomic barometer, with its movements increasingly tied to the same forces driving traditional financial markets.
“As a $2.5tn asset, Bitcoin has matured into a macro portfolio allocation that trades a lot closer to gold as a global liquidity and USD weakness proxy,” Lim said.
This fundamental shift means that Bitcoin’s price is now more sensitive to global economic conditions than supply-and-demand dynamics.
“The ebb and flow of liquidity and broader market vicissitudes may, on the margin, play a larger role in setting cryptocurrency trends/returns/risk premia/covariant characteristics, particularly as common ownership between large cap digital assets and other macro risk factor proxies (e.g. AI/compute, energy, fintech, trend/momentum, growth, memes),” Grant explained.
As a result of Bitcoin’s newfound integration, its price movements correlate with these broader trends. Its risk and return characteristics are now intertwined with other major asset classes. Such a change marks a significant departure from previous cycles, where Bitcoin was often seen as an uncorrelated hedge against traditional market volatility.
Despite this transformation, it doesn’t necessarily represent the complete disappearance of the four-year cycle.
How Is Bitcoin’s New Role Reshaping Investment Strategies?
Grant and Lim believe that, rather than dying, the Bitcoin halving price event has mutated into a more complex and nuanced occurrence primarily driven by a predominantly institutional market.
This shift suggests that Bitcoin’s future price will focus more on its newfound role as a global macro asset. Investors must now focus on the same indicators that move other major asset classes.
Central bank policies, inflation data, and global liquidity will likely bear greater weight than halving.
This evolution confirms Bitcoin’s maturation from a speculative niche asset into a legitimate financial instrument, signaling a new era for its role in the global economy.
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