Many traders have traditionally seen Bitcoin’s harving events as a predictable indicator of price increases that are looming. But in 2024, the cycle left that precedent. Bitcoin prices rose for the first time, not after the Harving episode.
Derivative trading experts told Beincrypto that pre-discharge price gatherings are likely to be a repeating feature of future cycles. Bitcoin has been integrated into mainstream finance and has attracted great interest from institutional investors, replacing the predictable, retail-driven cycles of the past.
Fading grips for a 4-year cycle
Since the dawn of Bitcoin, assets have throttled the traditional four-year price movement cycle. This half-event in favour of the principles of rarity and maintaining controlled inflation reduces the reward of mining new blocks in half.
In past cycles, Bitcoin prices usually experience meetings that go up to half as they are in 2016 or 2020. In the months following this event, the highest ever highs have always been reached.
However, this important supply shock is beginning to change. In the last half of the episode of 2024, Bitcoin prices hit a new all-time high just weeks before the expected event in April.
The traditional strategy was to “buy a dip” during the bear market and wait for the post-harving bull run to reach a new peak, but last year’s phenomenon left the established playbook.
This change is not surprising. Bitcoin has undergone major changes since its creation in 2008. Real-world demands from major financial players around the world can partially explain the break from predictability.
What causes Bitcoin’s unprecedented pre-harving peak?
The unprecedented Harving Peak in March 2024 was not the result of typical retail-driven excitement. Instead, it was a strong demand shock organized by a new class of investors.
Gordon Grant, former Managing Director of Genesis and an expert in cryptocurrency derivatives trading, calls these large and sophisticated entities “top tiers” allocators.
This group of investors, including funds from the corporate Treasury and other institutions, has been allocated for the first time to Bitcoin at a high price.
Unlike retailers, their strategy is not short-term speculation, but long-term accumulation.
“The top tier of allocators left the “Treasury,” who put Fiat in their assets years ago before making their first allocation to assets at current prices, namely the “Treasury” (publicly raised companies) that often raise funds through converts and stock pipes. Value), Grant told beincrypto.
Simply put, these companies view Bitcoin as a long-term HODL asset. Their goal of exacerbating holdings as soon as possible represents the best form of Bitcoin’s integration into the traditional financial system.
“In a sense, (this) represents an approach to deification of digital products’ financialization,” Grant added.
In this new market reality, the peak of pre-divorce arose directly from institutional demand. The influx of capital from these powerful allocators has created sustained purchasing pressure that could push Bitcoin prices up to new highs long ago, creating traditional supply shocks.
This shift represents the changes in the signal that traders and investors use to predict future market movements.
The end of predictable indicators
Historically, Bitcoin Harving has been a strong indicator for retail investors. Knowing that the event would cut the supply of newly created Bitcoin by half, investors were anticipating a predictable supply shock.
This cycle was a central aspect of the Bitcoin investment narrative, which influenced market psychology and promoted periods of boom and bust. However, this predictable pattern is no longer a reliable indicator.
According to Grant, the market is mature, with half the effect being evaluated more effectively.
“As with other alpha signals in many markets, signals around Harving have begun to be a factor in trade, anticipated and investing decisions in advance,” he said.
In short, sophisticated institutional investors can no longer wait for half the event. They understood the story of supply shocks and accumulated bitcoin beforehand.
This pre-trade activity erodes half of its force as a catalyst for surprise. As a result, markets currently dominated by investors armed with advanced market analysis are more efficient, less volatile and less responsive to the half itself.
“Bitcoin is being driven more by the global liquidity cycle than the recent harving cycle,” Joshua Lim, global co-head of Falconx’s market, told Beincrypto.
This phenomenon shifts focus from pre-programmed events to broader economic forces.
It’s intertwined from uncorrelated
With the influx of institutional capital, Bitcoin is no longer an isolated asset. It becomes a barometer of the macroeconomics, and its movement is increasingly linked to the same force driving traditional financial markets.
“As a 2.5 tonnes of assets, Bitcoin will mature into macro portfolio allocations and approach gold as a weakness proxy for the global liquidity and US dollar,” Lim said.
This fundamental change means that Bitcoin prices are more sensitive to the global economic situation than supply and demand dynamics.
“Liquidity and broader market variability could play a greater role in setting cryptocurrency trends/returns/risk premier/covariate characteristics, especially as general ownership between large digital assets and other macro risk factor proxies (e.g., AI/computing, energy, fintech, fintech, trends, momeme, growth, growth).
As a result of the new integration of Bitcoin, its price movements correlate with these broader trends. Its risk and return characteristics are currently intertwined with other major asset classes. Such changes indicate a significant deviation from previous cycles where Bitcoin is often seen as an uncorrelated hedge against traditional market volatility.
Despite this change, it does not necessarily represent the complete disappearance of the four-year cycle.
How is Bitcoin’s new role restructuring its investment strategy?
Grant and Lim believe that Bitcoin Harving Price Event has mutated into a more complex and subtle event driven primarily by institutional markets than it would die.
This shift suggests that future prices for Bitcoin will focus more on the new role as a global macro asset. Investors should focus on the same metrics that move through other major asset classes.
Central bank policies, inflation data, and global liquidity could bear greater weight than Harving.
This evolution confirms Bitcoin’s maturation from speculative niche assets to legitimate financial instruments, indicating a new era of its role in the global economy.
Do posts die in a 4-year crypto cycle? New investors may be changing the rules that first appeared in beincrypto.
