The topic of Bitcoin halving is an inevitable topic whenever the "bull market" is mentioned. But in fact, how much is the correlation between Bitcoin halving and the bull market, and where is the logic?

Bitcoin halving is one of the most popular topics in the cryptocurrency circle. Is it really so? This article will analyze the relationship between Bitcoin halving and price, as well as the logic behind it. At the same time, it will analyze the correlation between the general market and Bitcoin prices to determine how much Bitcoin halving is linked to the price of the currency.

Emotions and logic of the halving

Many people think that the impact of “halving” on#Bitcoinis scarcity, which has led to people’s hoarding and speculation on BTC.

In fact, the so-called "halving" means that the output is halved. The whole network invests the same cost (computing power) in mining, but the output of BTC is halved.

If the total network computing power is halved, the BTC mining cost will remain unchanged. Due to expectations (expected BTC to rise) and sunk cost factors (mining machine costs are sunk costs, as long as mining output is higher than the liquidity cost, miners will continue to mine), the BTC computing power is likely to be higher than halving.

Otherwise, as long as the computing power of BTC exceeds half, the mining cost of BTC, or the production cost, will increase. As more and more high-cost BTC are mined, the price of BTC is pushed to a higher point. Therefore, the peaks of several rounds of BTC bull market were not near the halving, but more than a year after the halving.

Therefore, the logic of "halving" driving the bull market is not only the situation, but also the cost factor. Of course, cost cannot determine the price, especially for "coins", it is too common for prices to fall below the cost, haha.

LTC Halving

Some friends believe that the performance of LTC halving in 2023 will be far worse than that in 2019, and this round of BTC halving may not perform well either.

In 2019, Litecoin’s halving occurred in August, while the price peaked in June. This is of course due to the impact of halving on sentiment.

But do you think this is a coincidence? In June 2019, the Federal Reserve began to cut interest rates!

Macro and the bull market

Many cryptocurrency enthusiasts scoff at the macro outlook because in the past there was indeed no high correlation between BTC and U.S. stocks.

But in reality, it’s possible that BTC has barely escaped the macro cycle.

it is known:

BTC had its first halving on November 28, 2012, and reached its peak about 12 months later (November 2013).

On July 9, 2016, BTC had its second halving, and about 17 months later (December 2017), BTC reached its peak.

On May 12, 2020, BTC had its third halving, and about 18 months later (November 2021), BTC reached its peak.

Maybe we didn’t realize:

The US M2 growth rate reached its peak in January 2012, and BTC reached its peak about 22 months later (November 2013).

The US M2 growth rate reached its peak in October 2016, and BTC reached its peak about 14 months later (December 2017).

The US M2 growth rate reached its peak in February 2021, and BTC reached its peak about 9 months later (November 2013).

The most accurate one is (???):

The US election took place in November 2012, and BTC reached its peak about 12 months later (November 2013).

The US election in November 2016, BTC reached its peak about 12 months later (November 20173).

The US election in November 2020, BTC reached its peak about 12 months later (November 2021).

It has been analyzed more than once that Satoshi Nakamoto designed BTC to halve every 4 years, and if miners were not rushing to mine, the halving would occur approximately in January after each presidential election (when the president takes office). Satoshi Nakamoto's design definitely took into account the US policy and economic cycle, and it was definitely not a fantasy of Little Bee!

As shown in the chart, most of the three US elections occurred near the peak or small peak of the M2 money supply growth rate. As long as the M2 growth rate is greater than zero, it is loosening the money supply, and the M2 growth rate near the peak indicates that it is in the stage of accelerated loosening. The little bee understands that using a looser monetary policy during the election may be conducive to economic prosperity.

The release of money will lead to abundant US dollar liquidity in the market, and of course part of it will boost the speculative market.

2015 Bitcoin Situation

After this analysis, the conclusion is very obvious.

BTC's bull run every four years is driven by "halving" and is also influenced by macroeconomic factors.

The key to the#LTChalving surge may not be the halving, but the macro view. Therefore, if LTC does not perform well during the halving in 2023, there is no need to worry too much. There is no need to worry about whether there will be a bull market in 2025, and there is no need to worry too much about LTC.

The positive impact of BTC halving will still exist, the Federal Reserve will always cut interest rates, and US dollar liquidity will always flow from a tight environment to a loose environment.

From 2006 to 2007, the Federal Reserve maintained high interest rates for about 14 months. The most pessimistic expectation is that the interest rate will be cut by the end of next year, while the most optimistic expectation is that the interest rate will be cut in the second quarter of next year.

Therefore, affected by macro factors, the bull market cycle should be pushed back again from the beginning of interest rate cuts to the peak of M2, rather than being advanced to the end of 2024 as originally thought, or even to 2026. It is still difficult to predict the specifics now.

When to buy at the bottom?

As for the question of when to buy the bottom, we still have to wait for the release of this month's Federal Reserve dot chart, which can reveal two turning points.

Stopping the rate hike is a turning point, and starting to cut the rate is the second turning point. There may be a small emotional rebound at the turning point, but it is not optimistic. After all, since 1960, the US M2 money supply should be the first time to show negative growth, and the US dollar liquidity is tight. Even if the interest rate has just been cut, it is still a high-interest stage, and the previously high-interest loans have entered a repayment pressure period, which is also risky.

Bottom-fishing requires some patience. Note that some copycats have been active in pulling up stocks recently. Some copycats may have opportunities in the short term, but in the long term, copycats should be very cautious.