Outlier Ventures: The four-year Bitcoin cycle is dead, experiencing its worst halving year performance
Web3 accelerator and investment firm Outlier Ventures stated in their latest report "Bitcoin Halving. The Four Year Cycle Is Dead" that investors can now discard the concept of Bitcoin's four-year halving bull market cycle.
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Is this the worst Bitcoin halving year?
Outlier Ventures pointed out in a report that the market is currently witnessing the worst post-halving price performance in history since the Bitcoin halving. The summary is as follows:
More than 125 days after the halving this year, Bitcoin has dropped by -8%, which is historically the worst compared to the previous average increase of 22%.
The 2016 halving was a turning point, after which the crypto market matured and diversified, making the BTC block reward insignificant.
The surge after the 2020 halving was purely coincidental, mainly due to unprecedented money printing policies post-pandemic.
The pre-halving surge this year was also driven by the approval of a Bitcoin spot ETF.
Diminishing Impact of Bitcoin Halving
Jasper De Maere, Research Lead at Outlier Ventures, listed the price increases of Bitcoin 125 days after each halving, emphasizing that the fundamental impact of halving events on Bitcoin and other digital asset prices is no longer significant:
After the 2012 halving: 739% increase
After the 2016 halving: 10% increase
After 2020 halving: 22% increase
This year: -8% decrease
Halving Still Subject to "Psychological Factors"
De Maere mentioned that the strongest argument for halving in the market is the significant reduction in miner selling pressure. However, even if all miners were to immediately sell rewards after halving, before 2017 this would have had a 1% to 5% impact on the market, but now it only accounts for 0.17% of trading volume, as shown in the figure below.
He also pointed out that the strong performance after the 2020 halving was also coincidental, as it coincided with a massive global capital injection post-pandemic, with the U.S. increasing its money supply by over 25% that year. Additionally, the DeFi explosion was another major factor.
Although he acknowledges that halving may still have some psychological effects, he emphasizes:
As the digital asset market matures, it is time for founders and investors to abandon the concept of a four-year bull market cycle. The price of Bitcoin still influences the overall market and affects the funding capabilities of Web3 projects, and founders should better understand market driving factors to more accurately predict funding opportunities.
He added that abandoning the halving cycle concept does not mean Outlier Ventures holds a pessimistic view of the overall market.