In-depth Analysis of Bitcoin Halving's Impact on the Market

The impact of the Bitcoin "Halving" event goes far beyond simple scarcity. In fact, this mechanism involves complex economic principles and market dynamics.

The Halving event is essentially a reduction in output. The total network maintains the same computational power investment, but the Bitcoin output is halved. This change may lead to two scenarios: either the total network's computational power is halved to keep costs unchanged, or the mining costs increase. However, due to market expectations and the sunk cost effect, the computational power is likely to exceed the level before the Halving.

As the number of high-cost Bitcoins increases, their price is often pushed higher. Historical data shows that the peaks of Bitcoin bull markets usually occur more than a year after the Halving. Therefore, the Halving driving the bull market is based not only on emotional factors but also on actual cost factors. Of course, cost does not completely determine price, especially in the cryptocurrency market.

Analysis of Litecoin Halving Effect

The performance of Litecoin's Halving in 2023 is not as good as in 2019, which has raised some concerns. The price peak before the Halving in 2019 actually coincided with the Federal Reserve starting to cut interest rates, a coincidence worth pondering.

Macroeconomics and Cryptocurrency Cycles

Although many investors overlook macro factors, Bitcoin may have been influenced by macroeconomic cycles. Historical data shows that Bitcoin's price peaks are not only related to Halving cycles but also have remarkable consistency with the growth rate of the US M2 money supply and the presidential election cycle.

The four-year Halving cycle designed by Satoshi Nakamoto likely took into account the policies and economic cycles of the United States. U.S. elections typically occur near the peak of the M2 money supply growth rate, indicating a phase of accelerated monetary easing. This loose monetary policy provides ample liquidity to the speculative market.

2025 Outlook

The Bitcoin bull market cycle is not only influenced by Halving but is also closely related to macroeconomic factors. Although the Litecoin Halving in 2023 performed poorly, this should not affect expectations for a Bitcoin bull market in 2025.

The Federal Reserve's interest rate cuts and the easing of dollar liquidity will eventually arrive. Considering the current high interest rate environment, the bull market cycle may be delayed until 2026. However, the specific timing is still difficult to predict accurately.

Investment Strategy

Grasping the timing of investments requires close attention to the Federal Reserve's policy signals. Stopping interest rate hikes and starting cuts are two key turning points that may trigger a short-term emotional rebound. However, given that the M2 money supply in the U.S. has experienced negative growth for the first time, along with high-interest loans entering a repayment pressure period, the market still faces risks.

For the bottom fishing strategy, it is advisable to remain patient. Although certain small cryptocurrencies may present short-term opportunities, long-term investment should still be approached with caution. In the current market environment, carefully selecting investment targets and timing is crucial.