In the past two weeks, the global market has gradually calmed down after the panic selling in early August, with the gold price constantly hitting new highs, and the US stock market also bouncing back significantly from its low point. However, Bitcoin has been in a state of shock consolidation ever since it fell below the $60,000 mark on August 5th. It was not until today that the price started to rise slightly and reached $61,000 during trading, with an intraday increase of nearly 4%.

Data shows that four months have passed since the current halving cycle, but the bitcoin range has fallen by about 8% during these four months, marking the worst halving performance ever. Looking back at history, bitcoin has only begun to gain momentum in the 180 days after each halving, and there have been explosive trends in the future market; if this halving trend can also be successfully realized this year, does it mean that bitcoin will start a new round of upward trend in the upcoming October?

Why does Bitcoin deviate from the market trend when US stocks and gold rise sharply?

After the overall market downturn last week, various economic data released "positive news", boosting the US stock market, while gold soared due to increased demand for safe-haven assets and expectations of interest rate cuts. However, Bitcoin has not benefited from the risk assets brought about by the rate cut, nor has it played a similar hedging role as gold for safe-haven assets.

The head of strategy and business development at 21Shares pointed out that as inflation arrives as expected, there is a higher possibility that the Federal Reserve will cut interest rates by 25 basis points, which may support risk assets. However, Bitcoin and Ether still show negative reactions, possibly because the market expects the Federal Reserve to adopt more dovish interest rate measures. In addition, under the volatility of the market, Bitcoin's risk attributes are obviously higher than other assets such as gold and US stocks, so traders are more cautious about it.

Therefore, analysts believe that the most crucial factor is the background of the interest rate cut. If it occurs during a period of low inflation and economic prosperity, it may have a more significant stimulating effect on asset prices. However, if the interest rate cut happens during an economic downturn, it may send a negative signal and cause funds to flow from high-risk assets to safer assets.

In addition, the ETF for spot Bitcoin has been launched for several months since the beginning of this year and has attracted billions of dollars in inflows, pushing Bitcoin to a historical high in March. However, with the price falling and consolidating, the heat of the Bitcoin ETF has also decreased. The funds accumulated by the previous period of Bitcoin ETF have all entered the market, and it is difficult to continue to bring about substantial growth in the short term.

Looking back at history, Bitcoin's rise after 180 days of halving is amazing?

High and low points in the cryptocurrency market have always been driven by a series of factors, including interest rates, technological leaps, and investors' herd mentality. Currently, expectations of an interest rate cut and the US election may push short-term volatility, but the factors that make the cryptocurrency bullish in the long run still exist.

From a technical perspective, Bitcoin's average return rate in August and September is poor, making them the only two months of negative returns this year. However, Bitcoin has performed well in October-December.

In addition, looking back at the first three halving cycles, it can be found that after the halving, Bitcoin's price broke through the previous historical high point in half a year or a year, and started a new round of upward trend; based on this time span, there is a high probability that Bitcoin will see a similar trend this October.

Matt Hougan, the Chief Investment Officer of Bitwise, believes that the most significant influence on the trend in the cryptocurrency field is likely to be whether institutions and professional investors will allocate cryptocurrencies on a large scale, because institutional investors control about 60% of the U.S. stock market, while such institutions only own up to 10% of Bitcoin; if they can achieve a similar proportion as the former, it means that there will be a huge amount of capital flowing in.

According to the 13F reports submitted by various institutional companies to the SEC on a regular basis, about 44% of asset management companies have increased their positions in Bitcoin ETFs in the second quarter of this year, and about 22% of market participants have remained stable, with only about 21% of institutions reducing their positions and 13% choosing to exit the market. Hougan believes that the performance of spot Bitcoin ETF is quite good compared to other ETFs.

According to media statistics, the funds holding Bitcoin spot ETFs have increased by a total of 701, and the total number of funds holding such ETFs has increased to nearly 1,950. Robert Michnick, head of digital assets at BlackRock, said he expects retirement funds, donor-advised funds, sovereign wealth funds, insurance companies, asset management companies and family offices to lead a new wave of inflows.

The US election may also have a positive impact on Bitcoin. The bipartisan coalition in Congress has already pushed three cryptocurrencies bills through the House of Representatives this year. As the Republican Party officially included cryptocurrencies in its 2024 platform and the Harris campaign team re-evaluated its position, the cryptocurrency industry is about to see regulatory clarity.

Of course, historical trends can only be used as a reference. After experiencing four halvings, the price of the currency may have a polarized response to this major event, and the increase may not be as good as before. But in the long run, under the background of loose macro environment, the liquidity of funds has been improving, and there is still room for Bitcoin to rise. Investors who buy Bitcoin at a low price after selling it also have the opportunity to wait for the arrival of the rally.

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