By Sunny Lu, CEO of VeChain
“Bitcoin is a scam,” I concluded in 2012, after my first experience almost using it—which, as you might have guessed, was a bad one. “It feels like a Ponzi scheme.”
And yet, more and more people around me were preaching the new financial model it presented. I wanted to understand why. So after my first negative experience with Bitcoin, I gave it another chance and read up on it on Bitcoin Talk, in the hopes of getting more information and seeing what others saw.
I didn’t understand a damn thing.
But Bitcoin wouldn’t leave me alone. It came back to tap me on the shoulder a year later when I was working as CIO at Louis Vuitton China. This time around, I spent more time studying it, read the whitepaper and source codes over and over again, and finally understood its value. In a way, it felt like fate.
I’ve lived and breathed the crypto market ever since. I’ve seen winters come and go and witnessed the halvings that have brought the bulls back to the pit. If there’s one thing I’m certain of, it’s that this year’s halving will be different from previous ones.
$1K to $19K to $65K.
Bitcoin’s ATHs following the 2012, 2016, and 2020 halvings, respectively. The numbers speak for themselves: bitcoin’s ascent was magnificent.
There was, however, an irregularity following the 2020 halving: there were two ATHs in 2021. The first ATH, $65K, came after the Coinbase IPO in April, and the second, $69K, was linked to the Bitcoin Futures ETF approval in November.
This year, we haven’t even reached the halving, and yet bitcoin has reached a new ATH: $73K. Sounds impressive, doesn’t it?
It is…and it isn’t.
The fact that bitcoin reached ATHs–twice, I might add–before the halving is something we haven’t seen before.
But, come on. $73K? That’s nothing. That is when compared to the previous ATH of $69K. The difference is minimal, and so is the one between $65K and $69K–especially when compared to the jumps separating bitcoin’s previous ATHs. The block rewards are even more telling: the differences in their reduction are becoming very small. The current block reward, 6.25 BTC, will be reduced to 3.125 BTC after the next halving. Comparatively, this reduction is much smaller than that of the previous halving from 12.5 BTC to 6.25 BTC and those before it, in turn reducing the changes in supply and demand.
So, while the halving still has—and likely always will have—an important psychological influence on the entire market, it no longer has the same impact it once did.
It’s time we faced the truth: the halving will become even more irrelevant in the future. And yet this year’s halving will present a historic milestone.
Newer forces at play: institutional adoption and regulation
If we look back to the impact of the 2020 halving on bitcoin prices in 2021, there’s an additional takeaway: the ATHs were spurred by regulatory progress and institutional interest. The fact that there was a second ATH within the same cycle due to this highlighted the magnitude of the impact institutional and regulatory forces could have on bitcoin prices.
This year, we’ve seen it happen again. 2024’s ATHs are most certainly tied to the approval of the Spot Bitcoin ETFs, which are seeing billions of dollars in inflows every day. We’re witnessing the effects of greater institutional and mainstream adoption on bitcoin prices outweigh those of the halving itself. So while on the one hand, the halving inherently drives prices up by cutting supply, on the other, the ETF approvals are evidence of a stronger force at play. So strong, that it drove bitcoin to a new ATH before the halving even came around.
So this year’s halving is going to be historic, but not because of the event itself. Rather, it’s the context that it’s operating in that will make this halving more impactful than previous ones.
Ushering in a new era of adoption
The first iPhone to be released was momentous. Then so were the next few generations, because each subsequent one was significantly better than the last. Now the differences between them are becoming less and less apparent, meaning they’re causing less and less excitement. But it doesn’t matter, because they’ve cemented themselves into our lives, and most of us can’t remember how we lived life without them.
Bitcoin, cryptos, and blockchain technologies are undergoing the same process. The halving is becoming less impactful because ultimately bitcoin is becoming more and more integrated into our financial system and the business world.
Here’s the difference: to match bitcoin’s progress, the crypto space overall needs to continue to deliver. Projects must evolve and change to provide real value, or they won’t be able to keep up. If 2022 taught us anything, it’s that projects and individuals who are just attracted to the new funds and money flowing into the space won’t survive.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.