Analysis of Multiple Factors in the Crypto Assets Market Cycle

The halving mechanism's impact on Bitcoin is not only about creating scarcity, but more importantly, it changes the economic principles of mining. When the output is halved, assuming the total network hash rate remains unchanged, the mining cost will actually double. However, due to miners' expectations of price increases and the fixed costs already incurred, the hash rate is likely to continue to increase. This means that the production cost of Bitcoin will rise significantly, which could drive up prices in the long term.

It is worth noting that historically, the bull market peaks of Bitcoin usually occur more than a year after the halving, rather than immediately before or after it. This suggests that the halving event itself is not the only factor directly triggering the bull market, and other macroeconomic factors should also be considered.

Comparing the market reactions to the Litecoin halving in 2019 and 2023, we cannot simply extrapolate this to the upcoming Bitcoin halving. The price increase before the Litecoin halving in 2019 was likely influenced by the Federal Reserve beginning to cut interest rates, rather than solely being due to the halving.

In fact, the price cycles of Bitcoin seem to be closely linked to the broader macroeconomic cycles. The peaks of the past few bull markets not only coincided with the halving cycles but also closely matched the peaks in the growth rate of the US money supply (M2) and the US election cycle. This suggests that the design of Bitcoin may have taken into account US policies and economic cycles.

During the U.S. election period, there is often a peak in the growth rate of money supply, which may be aimed at stimulating economic prosperity. The increased liquidity partially flows into speculative markets, which may have fueled the bull market of Crypto Assets.

Based on these observations, we can speculate that the future bull market will not only depend on the halving but also be influenced by macroeconomic policies. The Federal Reserve's interest rate cuts and changes in the M2 growth rate may affect the timing of the next bull market, potentially delaying it until around 2026.

For investors, it is especially important to pay attention to the Federal Reserve's policy signals. Halting interest rate hikes and starting to cut rates are both potential market turning points, but given the current tight U.S. dollar liquidity and high interest rate environment, caution is still necessary even at these turning points.

Overall, the cyclical changes in the Crypto Assets market are the result of multiple factors working together. When making decisions, investors must not only consider internal factors such as halving but also pay close attention to changes in the broader macroeconomic environment.