Analysis of the Crypto Assets Market Cycle

The impact of Bitcoin halving on the market is not only due to the accumulation and speculation emotions brought about by scarcity. In fact, halving means that the same computational power is invested across the entire network but the output is halved, which directly increases the production cost of Bitcoin. Due to expectation and sunk cost factors, Bitcoin's computational power is likely to be higher than before the halving, further raising production costs. This explains why the peaks of Bitcoin bull markets often occur more than a year after the halving.

However, relying solely on halving cannot fully explain the market cycles of Crypto Assets. Taking Litecoin as an example, its price peak before the halving in 2019 coincided with the Federal Reserve's beginning of interest rate cuts, which may not be a coincidence. In fact, the market cycles of Bitcoin seem to be closely related to macroeconomic cycles.

Observing the past few rounds of Bitcoin bull markets, we can find some interesting patterns:

1. Bitcoin typically reaches its price peak about 12-18 months after the halving.
2. After the M2 money supply growth rate in the United States reaches its peak, Bitcoin prices peak approximately 9-22 months later.
3. About 12 months after the U.S. presidential election, the price of Bitcoin reached its peak.

These patterns suggest that the design of Bitcoin may have taken into account U.S. policies and economic cycles. During U.S. election periods, there tends to be a more accommodative monetary policy, leading to ample market liquidity, with some funds flowing into speculative markets, including Crypto Assets.

Therefore, the future Crypto Assets bull market may be influenced by multiple factors, including halving, adjustments in Federal Reserve policies, and the overall economic environment. Currently, the M2 money supply in the United States has experienced negative growth for the first time, and dollar liquidity is tight. Even if the Federal Reserve starts to cut interest rates, the repayment pressure of high-interest loans still exists, and market risks cannot be ignored.

For investors, more patience may be needed at this stage. In the short term, there may be opportunities in certain small-cap crypto assets, but long-term investments still require caution. The specific timing of the future bull market is still difficult to predict accurately, but it may be later than the expected end of 2024, possibly even postponed to 2026. Investors should closely monitor the Federal Reserve's policy trends, especially the upcoming dot plot, to look for potential market turning points.