Many traditional traders have viewed Bitcoin's halving event as an indicator predicting an upcoming price surge. However, in 2024, this cycle has broken precedent. For the first time, Bitcoin's price increased before rather than after the halving event.
Derivative trading experts told BeInCrypto that the price increase before halving is likely to become a recurring feature in future cycles. As Bitcoin has integrated into mainstream finance and attracted significant attention from institutional investors, the predictable cycles previously led by retail investors are gradually being replaced.
The Weakening of the Four-Year Cycle
Since Bitcoin's inception, the asset has followed a traditional four-year price volatility cycle. Adhering to Satoshi Nakamoto's principles of maintaining scarcity and controlling inflation, this halving event reduces the reward for mining new blocks by half.
In previous cycles, such as in 2016 and 2020, Bitcoin's price typically experienced a price surge before the halving. The All-Time-High was always achieved in the months following this event.
However, this significant supply shock is beginning to change. In the last halving event of 2024, Bitcoin reached a new ATH a few weeks before the expected event in April.
While the traditional strategy was to "buy when prices drop" in the bear market and wait for the post-halving price surge to reach a new peak, last year's phenomenon broke the established strategy.
This change is not surprising. Bitcoin has undergone significant transformations since its creation in 2008. The actual demand it currently has from large financial investors globally can partly explain its unpredictability.
What Caused Bitcoin's Unprecedented Peak Before Halving?
The unprecedented peak before halving in March 2024 was not the result of excitement driven by retail investors. Instead, it was a strong demand shock orchestrated by a new class of investors.
Gordon Grant, former CEO at Genesis and cryptocurrency derivative trading expert, calls these large and sophisticated entities "top allocators".
This group of investors, including corporate treasuries and other institutional funds, are making their first allocations to Bitcoin at an all-time high.
Unlike retail investors, their strategy is not short-term speculation but long-term accumulation.
"The top allocators... have shifted from putting fiat into assets in previous years to potentially making their first allocations at current prices, that is, [publicly traded companies'] treasuries are raising capital typically through conversion and capital pipelines... to inject liquidity into business operations... to accumulate cryptocurrency with hopes of achieving a multiple on [Net Asset Value]," Grant told BeInCrypto.
Simply put, these companies view Bitcoin as a long-term HODL asset. Their goal is to accumulate assets as quickly as possible, representing the highest form of Bitcoin's integration into the traditional financial system.
"To some degree [this] represents an approach to the pinnacle of digital commodity financialization," Grant added.
In this new market reality, the pre-halving peak is a direct result of institutional demand. The capital flow from these powerful allocators created sustainable buying pressure that pushed Bitcoin's price to new heights before the halving could create its traditional supply shock.
This change also represents shifts in the signals traders and investors use to predict future market fluctuations.
The End of a Predictable Indicator
Historically, Bitcoin's halving was a powerful indicator for retail investors. Knowing this event would halve the supply of newly mined Bitcoin, investors predicted a predictable supply shock.
This cycle was a core part of the Bitcoin investment story, influencing market psychology and driving boom and bust stages. However, this predictive model is no longer a reliable indicator.
According to Grant, the market has matured, and the halving effect is now more efficiently priced.
"As true with other alpha signals in many markets, the signal around halving has started to be traded ahead, predicted, and more efficiently calculated into investment decisions," he said.
In short, sophisticated institutional investors no longer wait for the halving event. They understand the supply shock story and have already accumulated Bitcoin.
This pre-trading has reduced the halving's power as a surprise catalyst. As a result, the market, now dominated by investors equipped with advanced market analysis, becomes more efficient, less volatile, and less responsive to the halving itself.
"Bitcoin is now more influenced by global liquidity cycles than the halving cycle," Joshua Lim, Co-Global Head of Markets at FalconX, told BeInCrypto.
This phenomenon shifts focus from a pre-programmed event to broader economic forces.
From Irrelevant to Integrated
With the rise of institutional investment capital, Bitcoin is no longer an isolated asset. It has become a macroeconomic indicator, with fluctuations increasingly tied to forces driving traditional financial markets.
"As a $2.5 trillion asset, Bitcoin has matured into a macro investment portfolio, trading almost like gold as a representation of global liquidity and USD weakness," Lim said.
This fundamental change means Bitcoin's price is now more sensitive to global economic conditions than to supply and demand dynamics.
"The changes in liquidation and broader market fluctuations may, to some extent, play a larger role in establishing the trends/profits/risk compensation/covariant characteristics of cryptocurrency, especially when there is common ownership among large digital assets and other macro risk representatives (such as AI/computing, energy, fintech, trends/momentum, growth, meme)," Grant explained.
The result of Bitcoin's new integration is that its price volatility correlates with these broader trends. Its risk and profit characteristics are now intertwined with other major asset types. This change marks a significant difference from previous cycles, when Bitcoin was typically seen as an uncorrelated hedge against traditional market fluctuations.
Despite this variation, it does not necessarily represent the complete disappearance of the four-year cycle.
How is Bitcoin's new role reshaping investment strategies?
Grant and Lim believe that instead of disappearing, Bitcoin's halving price event has transformed into a more complex and nuanced phenomenon, primarily driven by an increasingly institutional market.
This change suggests that Bitcoin's future price will focus more on its new role as a global macro asset. Investors must now concentrate on indicators similar to those moving other major asset types.
Central bank policies, inflation data, and global liquidation are likely to carry greater weight than halving.
This development confirms Bitcoin's maturation from a speculative niche asset to a legitimate financial instrument, signaling a new era for its role in the global economy.
