oinonen_t2025-02-17

Comparing Post-Halving Performance

After reaching its all-time high of 109,000 dollars in January, the leading cryptocurrency bitcoin is currently consolidating at the $97,000 level. Although the possibility of a technical correction lingers in the air, the halving cycle is not over yet. [Assessing Halving Cycles] When looking at bitcoin's halving of 2020 and its subsequent spot price peak, the asset climbed a total of 686 percent between 11th of May 2020, and 8th of November 2021. Between the latest halving on 20th April of 2024 and the recent ATH, bitcoin only ascended 63%. Although bitcoin's power-law model and law of diminishing returns suggest a more moderate future price performance, the 63 percent appreciation mirrors an unfinished halving cycle, with a plenty of upside. [MSTR as a Leading Indicator] Strategy (MSTR, former MicroStrategy) has continued its purchase program in early 2025, recently adding 7633 bitcoins to its balance sheet, and now holding a total of 478,740 units. MSTR's purchase program mirrors institutional demand and acts as a leading indicator to the underlying asset (bitcoin) itself. Strategy’s buys are usually pro-cyclical, and consequently more purchases signal a positive spot price trajectory. Vice versa, a potential lack of MSTR's purchases would signal a weaker market. [Looking Forward] So, what to expect in the short-term future? Despite the continuing halving cycle, I'd expect to see a sell in May effect, a sideways summer, and elevated price levels by the last quarter. The positive Q4 seasonality has been repeated in 2013, 2016, 2017, 2020, 2021, 2023, and 2024. A deeper correction could be multiple months or even a year away. Macro-level events, like an armistice in Ukraine, could significantly uplift risk-on assets, including bitcoin.