A Cointelegraph YouTube report (Oct 19, 2023) examines whether the April 2024 Bitcoin halving will trigger a bull market. The video explains the halving’s supply-shock logic but argues supply alone won’t guarantee price gains — demand and macro conditions (notably M2/money supply and interest rates) have historically coincided with past post-halving rallies. Experts Raoul Pal and Mike McGlone contend the halving is likely coincidental to larger macro cycles and that, given low M2 and high rates since 2022, the 2024 halving alone probably won’t spark a major rally unless liquidity and rates change.
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So I think the halving is coincidental to the macro cycle, but it doesn't matter because it still works.
Things that we most anticipate generally don't happen. And that's what I'm concerned about. It's complete consensus.
The catalyst that should spark the next crypto bull market is just around the corner. We are less than 200 days away from the bitcoin halving. Halving events have marked the beginning of the most impressive bull markets in bitcoin history. But does the bitcoin halving really guarantee the price of bitcoin will go up? And most importantly, what should expect from the next halving set for April 2024. In this video, I'll explain the significance of the bitcoin halving, its impact on prices, and why the next halving may play out differently from previous ones. I'm Giovanni and this is a Cointelegraph report. So why is the halving considered such a booster for prices? The bullishness around the bitcoin halving is based on a very simple rule of supply and demand. Approximately every four years, the rate at which new bitcoin is created is cut in half during the halving, which creates a supply shock. Basically, after each halving, there is less new bitcoin entering the market, which means if demand remains constant or increases, the price of bitcoin should go up. Also, the halving event attracts a lot of media attention to bitcoin. It generates hype and excitement around the asset, which tends to have a positive effect on prices. At least that is how it has played out so far. As you can see in this chart, the price of bitcoin has gone parabolic in the months following each halving. So does that mean bitcoin's price is automatically bound to skyrocket after each halving? That would be awesome. But the answer is no. And here is why. First, as I mentioned, switch supply is only one side of the equation. The other is demand. While the supply of new bitcoin decreases during the halving, demand does not necessarily go up. And if demand is stagnating, big upside price moves are unlikely. Second, the halving's impact on the supply of new bitcoin gets smaller after each one of these events and it will eventually become irrelevant. That means demand, rather than supply, is becoming the main factor impacting bitcoin prices. Third, the halving is an entirely predictable event. We all know well in advance that it will take place and when, and that may undermine its influence on prices. Imagine that a surprise party is about to happen, but everyone already knows about it, so they start partying in advance. When the actual surprise party starts, it is not that exciting because everyone already knows about it. Mike McGlone, senior commodity strategist at Bloomberg, told us more about this specific aspect.
Who has not said anything bullish about cryptos because of the halving. That's what I'm concerned about. It's complete consensus. Things that we most anticipate generally don't happen to speak about it this much beforehand is that's not an issue really affects markets.
Okay, you must be thinking, if it isn't the halving, then what is the catalyst behind Bitcoin's cyclical price uptrends? Well, there is always a combination of factors like market sentiment, regulatory developments and adoption trends. But the most important one is macroeconomic factors. In particular, I'm talking about M2 or money supply, which is an indicator that shows the amount of money circulating in the economy. Essentially, M2 shows how much cash is available to people for buying goods and making investments. Periods of high M2 usually correspond with low interest rates. Basically, when borrowing money is cheap and there is a lot of cash floating around, people are more likely to invest in risky assets like Bitcoin, which means more demand that is clearly visible in this chart. Historically, peaks in money supply have coincided with crypto bull markets and money supply bottoms are correlated with bear market. And guess what? All previous halvings happened during periods of high monetary supply. That coincidence has fueled the belief that halvings are a booster for Bitcoin's price. That is why Raoul Pal, macro investor and CEO of Real Vision, defines the Bitcoin halving as a false narrative. This is what he told us.
The halving is coincidental to the macro cycle. It just so happens that in 2008, nine magic things happened. One, all debts, all interest payments on all debts were forgiven. We went to zero interest rates everywhere. Zero interest rates and Bitcoin are birthed at the same time. And the macro cycle is this debt refi cycle every three and a half years to four years that happens that exactly corresponds to the crypto cycle. I think it's coincidental.
And so that leads us to a crucial question. Is the next bitcoin halving going to spark a major bull run? The answer is probably not, unless macroeconomic factors don't come into play. As we already showed, previous halvings coincided with periods of high monetary supply and low interest rates. But that may not be the case this time. Since the beginning of 2022, M2 has been shrinking and it is currently still very low. While interest rates are high, that has created an unfavorable environment for risk assets like Bitcoin.
Whole history of cryptos have been in the back of zero interest rates, and now they're not. They're very high, particularly in the US Particularly versus inflation. The Fed's got to start cutting rates and add liquidity. And that's what I started with. Liquidity right now is negative. So typically for that liquidity to be turned back on, risk assets have to go down. Maybe we won't have a US Recession, Maybe the Fed can start cutting rates and risk assets can just go right up. But that would be unlikely by the time we get to April next year, which is when the halving's supposed to be. I'm fearful that bitcoin cryptos, most cryptos, will be lower prices along with most risk assets like the stock market.
So the main takeaway is this. Unless there is a significant change in the macroeconomic environment, the price of Bitcoin is unlikely to rally solely because of the halving event. Sorry to disappoint you guys. The 2024 Bitcoin halving is unlikely to be the main catalyst that sparks the next crypto bull market. The macroeconomic picture is what matters most. In particular, global liquidity would have to increase and interest rates should go down in order to enable the next parabolic move. However, this should not undermine the significance of the bitcoin halving in the long term. We while it may not have a direct impact on prices, the halving remains a core element of Bitcoin's value proposition, that of a scarce asset with a fixed supply comparable to gold. That is the property that has made Bitcoin one of the best performing assets of the last decade and potentially of the decade to come. That's all for today's video. I hope you enjoyed it. See you next time. It.
