Will the Bitcoin halving bring back another bubble market? | Monex Securities, Masamichi Matsushima

[Bitcoin Market]
Will the halving bring back a market bubble? 

I'm Masamichi Matsushima, a.k.a. Marin, a cryptocurrency analyst at Monex Securities. In this special edition, I will explain the Bitcoin "halving" scheduled for around April-May this year and its impact on the market.

In January 2024, a Bitcoin spot ETF was approved in the United States. In response to this, Bitcoin soared to new all-time highs in both Japanese yen and dollar terms, and expectations are high that the halving anomaly will continue this time as well.

The halving is an event in which the amount of new Bitcoin issued is halved approximately once every four years, and it has attracted a lot of attention as a cyclical event in the bubble market. Below, I will look back on the trends of the past three halvings and predict the market after this, the fourth halving.

Bitcoin price trends after each halving

The chart below summarizes Bitcoin's halving and price trends.

Looking at this, we can see that while the price rose significantly from the halving to the end of the following year in each of the past three halvings, the rate of increase has been shrinking with each halving. This is because as the market capitalization increases, the price growth margin also decreases.

Assuming that the same trend will continue this time, and assuming that the price at the time of the halving is $50,000 BTC, even if we estimate the rate of increase to a low 200% by the end of the following year in 2025, it is predicted to reach $100,000 BTC.

On the other hand, if we look at the rate of decline from the peak to the trough of Bitcoin at each halving, it has repeatedly crashed by around 80% in the past, triggered by major events that occurred the year after the peak.

Even if the price rises to a level exceeding $100,000 BTC in 2025 with the fourth halving, we must be aware that a major event that causes a crash could occur afterwards. Because physical ETFs and other instruments are making it easier for money from financial markets to flow into the cryptocurrency market, the next shock could be large-scale and affect the financial markets.

Marin's featured stock: Chainlink (LINK)

This time, we will introduce Chainlink (LINK), known as one of the major oracle projects.

Normally, the data recorded in the blockchain is limited to addresses and transactions, so when developing a decentralized application (hereinafter referred to as dApps) on the blockchain, it is necessary to import various data such as price information and weather information from outside. Oracles mediate the exchange of such data, and Chainlink is the largest of them.

Chainlink can obtain price data for cryptocurrencies and NFTs, as well as rates such as exchange rates and stock prices, and is now used in dApps mainly in the financial field. In addition, it has recently announced a new function that allows various data to be obtained from any API, and the use of oracles is expected to expand in the future in blockchain games and other non-financial fields.

There remains the question of to what extent the reliability of data delivered through oracles can be guaranteed in a decentralized system, but Chainlink will increase its value as one of the functions that supports the development of dApps, that is, the development of Web 3.0.

Profile

◉ Masamichi Matsushima
Monex Securities Monex University Crypto Asset Analyst

Graduated from the Faculty of Economics at Osaka University. After leaving a city bank, he was a founding member of a crypto asset-related startup and engaged in industry research and market analysis. Joined the Monex Group in 2018. At Monex Crypto Bank, he wrote industry research reports such as "Blockchain Trends in China (2020)" and "Blockchain Data Book 2020," and currently oversees the Web3 newsletter and research report "MCB RESEARCH." He also contributes to many domestic media outlets. He has been in his current position since March 2021.

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