Bitcoin's Price Dynamics Evolve: Halving's Impact Wanes, Macro Factors Gain Influence
Bitcoin's price dynamics are shifting, with macroeconomic factors and traditional market alignments gaining influence over the once-dominant halving cycle. The latest halving in 2024 saw a more subdued price reaction, and future events may have less impact as nearly all Bitcoin enters circulation by 2028.
Historically, Bitcoin's price has followed a predictable pattern driven by halving events, which reduce miners' rewards by 50% and decrease the issuance rate. This typically leads to significant price increases. However, the 2024 halving saw a more modest 40% rise in the year following the event.
The Puell multiple, a metric measuring miner revenue relative to the network's price, dropped sharply after the 2024 halving but has since rebounded, indicating market stabilization. Despite the reduction in miner rewards, Bitcoin's hashrate has surged by nearly 50%, demonstrating the network's growing strength. Looking ahead to 2028, the last halving is expected to mark a significant shift in Bitcoin's inflation rate and potentially the last halving to profoundly impact its price.
Bitcoin's relationship with traditional financial markets, particularly the S&P 500, has become more aligned in recent years. This suggests that Bitcoin's price could begin to follow more conventional liquidity and business cycles. Inflation rates continue to decrease, and macroeconomic factors may increasingly drive Bitcoin's price action.
As nearly 97% of all Bitcoin enters circulation by the time of the next halving in 2028, the influence of halving events on the price may diminish. Instead, the US Federal Reserve's monetary policy and interest rate decisions, alongside major central banks like the ECB, are likely to significantly influence Bitcoin price trends in the years to come. Institutional acceptance and a clear legal framework will also play crucial roles in shaping Bitcoin's future price trajectory.
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