We've all heard it: Bitcoin halving is coming, get ready for the moon! It’s gotten to the point where this has morphed into a mantra in crypto circles, a kind of crypto space law of thermodynamics. What if I told you that the halving’s influence might be more narrative than obligation? What if the big price increases we’ve been pinning on it are really the result of something a lot more…human.
Halving Hype Or Historical Truth?
Let's be blunt. The halving does slow the pace at which new Bitcoin is introduced into circulation. Basic supply and demand, right? Scarcity drives up the price. Except, it's never that simple. Look back at previous halvings. Did the price skyrocket immediately afterward? Sometimes, yes. Sometimes, no. In many cases, the greatest improvements appeared months, sometimes years, later. Correlation doesn't equal causation.
Consider this: a year ago, another Bitcoin halving event occurred. As expected, the usual suspects got to work on forecasting the biggest real estate price jump ever, thanks to the drop in supply. What actually happened? The price increased sure, but simply laying the increase at the feet of the halving is intellectually lazy. To determine what’s really driving these major market movements, we need to zoom out and look at the big picture.
Elections Impact Crypto More Than You Think?
Let's talk about something nobody in crypto wants to admit: politics matters. For example, the election of a “crypto-friendly” figure could be the major catalyst. Consider the worst case scenario of Donald Trump winning reelection and returning to office. This should not be read as a general endorsement of any of the above candidates, by the way. We know that regulatory certainty can go a long way in changing market sentiment. Recognizing this reality is key to understanding the true underlying market dynamics. Crypto regulation may be relaxed, but the potential of the market could cause a tsunami. The potential of Bitcoin eventually being used as a reserve asset would overshadow the more easily calculable impact of a halving.
Think of it like this: the halving is like turning down the faucet a little bit. Political realignment combined with regulatory changes portends for opening up completely new spaces of opportunity. Even better, they can loosen the flow of the current networks! Which do you think has more of an affect on the flow.
The "Priced In" Problem
Here's the inconvenient truth: the market is often ahead of us. The halving is announced years in advance. Advanced traders and institutions certainly aren’t caught flat-footed by this event. They project, they plan, and they build it into their pricing. By the time the halving happens, much of that theoretical impact has already been baked into the valuation.
That’s like waiting for a stock to shoot up after an earnings surprise that everyone already knows is coming. Okay, the A LOT stock just got a lift. The actual wins likely came long before the announcement, thanks to the many advocates who were ready to pounce.
Beyond Bitcoin: A Portfolio Perspective
Now, let's be brutally honest: Bitcoin is volatile. Wildly volatile. It’s not a “digital gold” investment haven, despite what its proponents might assert. At times, it’s even gone down in tandem with the S&P 500, demonstrating that it is not above the broader market’s volatility.
To complicate matters further for risk-averse investors, there may be better options. Growth stocks, as one alternative, can sometimes deliver much of the same return potential but not with as much of the gut-churning volatility that Bitcoin has made infamous. Investment advisors have a long and proven track record of success. More than a decade before Netflix and Nvidia were household names. Those were the real "monster returns."
So, green energy boom or just talk? They excluded Bitcoin entirely from their recent list of the “10 best stocks to buy now.” That should tell you something. These are the same experts, though, who have an excellent track record of predicting the winning investments — and they’re taking their talents elsewhere.
I get it. The halving narrative is compelling. At first glance, it seems cut and dry, straightforward enough to follow, and it really plays into the narrative that Bitcoin is bred to go up forever. In the complicated, interconnected world of finance, simple answers are almost never the right ones.
So in place of jumping on the pump the halving hype bandwagon, let’s take a more measured, skeptical, contrarian view. Now let’s factor in the economic headwind, the gauntlet of regulatory hurdles and the unpredictable moving target that is market sentiment. It’s only then that we’ll really have a handle on what’s behind Bitcoin’s recent run-up in price. And only then can we invest where we’ll get the most return for our time and money, instead of just following a convenient fairy tale.
Don't get me wrong. That’s not to say I think Bitcoin is a poor investment. What I’m arguing though is that betting just on the halving as an indicator of future performance is playing with fire. Do your research. Be skeptical. And most importantly, keep in mind—that like everything we do, no amount of hardship will leave you with harried performance.
