Bitcoin Forum

Could the next Bitcoin halving potentially result in a price increase that is different from previous patterns, where low interest rates were a key factor behind the price surge?
Some argue that because the last halving occurred during a time of very low interest rates, this dynamic might not repeat in the upcoming halving.
Can anyone explain how interest rates influenced the past halving's impact on bitcoin's price and whether this could challenge the expectations of a price increase in the next halving?

With my practical knowledge of inflation and investments in assets like Bitcoin, I advise you to invest when there is a good and obvious reason for a bull run and be sure to let your technical chart confirms it on the higher timeframes before taking action.

Specifically, halving is a Bitcoin tradition that has had a track record of influencing Bitcoin in the past with no regard for the prevailing inflation (obvious reason). This same thing will most likely happen in the coming halving and even happen significantly more especially this time that people are more aware of the opportunity, and money will flow in. Bitcoin will spike higher within months irrespective of the status of inflation.

And like I always warn, people should stop making links between inflation and Bitcoin, they should rather view it as an asset and as an investment opportunity. In my own studies, Bitcoin and Inflation don't just relate proportionally as it could fall or rise during inflation. Just own your coin when we are in the bullish season, and you might also want to divest when we are in the bearish season.

This your post will be better fitted in the speculation board than bitcoin discussion.

Bitcoin market and its effect is uncertain and doesn’t have a general guide that’ll determine what will happen next to bitcoin price. Talking about low interest rate having an effect on the price surge in the last halving, it could not be the same this time again or what we expect won’t turn out to be so. Since the inception of bitcoin, this is a trend that at every halving, the price of bitcoin will increase and it is still following that pattern and I don’t think even in the next halving there is going be an exception to that. Bitcoin will surge again in price with either low or high interest rates.

Interest rate has no effect than fiat to devalue over time and bitcoin price will rise as the demand will increased some weeks to halving and the price will still increased many months after bitcoin halving. Do not let anything or anyone to distract you if you want to invest in bitcoin, you have nothing to worry about and do not compare fiat with bitcoin.

In long term, there are links between inflation and bitcoin. This is the second reason we should not also have money in fiat but in bitcoin instead. The more we go in time, the more fiat are devalued.

Low-interest rate increases the money supply and decreases the price for individual and business borrowing increasing economic activities. When this happens individuals and corporate bodies have more money to invest in cryptocurrencies and other areas. High-interest rate force investors to focus on fixed-income investments or safe-haven assets such as government bonds. In recent times there has been a correlation between the price of bitcoin and the US interest rate but this relationship is weak. But low-interest rate is not the only factor that contributes to the increase in the price of bitcoin during halving so I don't expect it to greatly affect the increase of the price of bitcoin during the season.

There are few major factors you need to watch out for that will create a massive surge in price after the halving ... Just hope they happen simultaneously during the halving period:

1. The promotion of Bitcoin by very influential people. This is needed to ensure that demands is strong when supply is lowered. By the way, Bitcoin bull run is nolonger influenced by worthless fundamentals such as an increase in adoption through centralized platforms/exchanges. Bullish fundamentals are those that are based on the Bitcoin ideals such as decentralization, transparency, immutablity, censorship resistant, deflation, etc. The influencers must be people who are idealistic.

2. Good development in the Bitcoin space, such as an improvement in the Bitcoin Project that's very significant and useful. The improvement has to expand the utility of Bitcoin without compromising on its ideals. Again, the improvement has to be based on the Bitcoin ideals to power up the price.

3. The demand for Bitcoin has to from the good side, and the demand should outweigh supply from the good side. If demand is from things that are contrary to the Bitcoin ideals, it's considered bad demand and won't have any positive effect on the price. If supply is lowered via the halving and demand remains constant, price will increase significantly because demand will be greater than supply.

Low interest rates means people will start to borrow more money because now they have to pay less interest and with less interest their will be more money in circulation too. With that money most of the people start to invest in BTC or in any other thing. But if they are investing in BTC as more money is in the market then more money is going into the BTC and more BTC are being demanded but the supply remains the same.

Due to which it surges up the price of BTC. But do not worry if Interest rates are not going to decrease this time but even though there are ETFs which will help BTC to surge up with more heat. Because They are keeping delaying the ETFs and i think they are doing it on purpose just to approve all of them at the right moment when BTC need ignition to the moon.

Low-interest rates played a major role in increasing the price of Bitcoin during the last halving, some of the money that was printed in 2020 found its way into Bitcoin, Gold, and real estate. When the rate is lowered, risk asset benefits because investors would want to borrow money from banks at a low rate and invest in assets that appreciate over time. For instance, Michael Saylor borrowed and invested in Bitcoin when the rate was zero. Generally, it has a positive influence on the market.

The only way I see the low interest rate benefiting Bitcoin is as a result of investors having the chance of getting a huge amount of loan that is given out to them with a lesser requirement for collateral, and the time for repayment is enough for the investors to gather up the borrowed amount without thinking about how much interest will be attached to it. Which makes it easier for them to always be able to grab a loan from the Banking sector and use such a loan to grab Bitcoin in preparation for the halving, and this buying opportunity usually increases demand, which in turn brings about price positivity.

I don't think the next year's halving will have to depend on anything relating to a low interest rate before it can pull off a bull market, as it is already certain that the bull run is going to come, not exactly in the year of the halving but in the coming year after.

We have had 3 halvings and the last of them recorded the lowest price returns, you cannot then attribute that price surge to low interest rates.
Interest rates could have been a factor but not a major one.

It had an impact cause it allows people have more money to spend on commodities like Bitcoin, increasing the demand.
It does not challenge expectations of a price increase and there is not enough link to draw any correlations.

- Jay -

Interest rates haven’t had a huge effect on Bitcoin in its lifetime mostly because the government hasn’t had to respond to a major issue with rate changes like we saw in 2007/2008. This may change however, as rate increases may push us into a major recession. If that does happen you will see demand for Bitcoin likely dry up and the price effected. However, if rates are aggressively lowered and we avoid a nasty recession it could be off to the races with cheap money.

Bitcoin is considered a better hedge against inflation than gold, why would you advise people to stop linking bitcoin and inflation? Inflation is also what causes us to abandon fiat money and look to bitcoin, so they are closely related and we cannot ignore that factor. Another thing, in the previous 3 halvings, bitcoin has never experienced any economic crisis or peak inflation. And with this could be a test of bitcoin's resistance to inflation, so it's worth looking forward to what's to come.

You are partially right. Low interest rate environment lead to inflation and inflation lead to people buying assets and home prices, stocks and crypto accelerated in price.

So the opposite will be true. It’s more expensive to borrow money so people will buy less stuff and prices will decrease. However in speculation there can always be bull markets and bear markets, so we will see what 2024 will bring.

Its still going to be true this year the next and for a decade or more that Dollar and the vast majority of the worlds major currencies remain weak.   Far too much supply can be forecast because the debt is already issued and will pay out and require renewal in future years.   If you told me all of the G7 is running a fiscal surplus and so combined with interest rates raised we are likely to see stronger currency standards then yea thats something of note.    We are about 40 years out from the times of Volcker and nothing is coming close to what he did to turn around the dollar devaluation back then, this is a blip.
  There is no intention to end or equal inflation, only that it should be a slow burn of value.  The ironic line I heard many years ago is inflation is more apparent when rates are rising, it was in reference to gold but same thing applies to all prices.

Yes. This also one of the keys too and we have to know market participants are not just one item, there are many, especially when there is talk of a press release about changes to the interest rate index policy from the US Central Bank or The Federal Reserve (The Fed). For example, maybe interest rates need to be raised higher for a longer time and this is a blow for most of the world's financial market players and has the potential to suck up liquidity from the crypto market and make the price of Bitcoin and other coins corrected and the most interesting thing is that the Dollar always steps on the gas ahead of the speech by the Chair of the Fed, Jerome Powell.

And why do you think it will?
Just because there are fewer Bitcoin mined every day so the pace at which the supply increases is slower suddenly people will start buying?

I'm really curious about how everyone thinks this is an event set in stone, bitcoin will have its halving and the price will skyrocket, don't you think it's quite a simple thing in which you assume a lot of things based on just past events? The myth of Bitcoing now going below the previous ATH as busted, we had just three halvings out of which one was barely known to the entire world, so taking such a bold assumption on so little data is just taking a gamble.

I see everyone here being so serious, the halving is coming so the price must go up, it's like some cult of the second halving coming of Jesus forming. What if there is no interest in investment the next year? What if we face a recession and CB keeps raising the interest rate with less and more expensive money for risky investments?


Oh yeah, you do realize you sound like a snake oil seller right now, do you?


Yeah, money will rain out of the sky for sure directly in our pockets, nothing to worry.
It's certain!!!!


Care to show me on this graph where is that relation you're talking about? Cuse it looks to me more like the opposite!
https://www.talkimg.com/images/2023/08/16/MXUPm.png

We haven't seen the long term yet, we are only speculating, and if at all Bitcoin gives me a return by then which I know it would, I will rather appreciate it for my positive investment rather than a hedge for any inflation. The short-term experience I have had with Bitcoin in recent years proves that it could fall during inflation too. This is why it's important to manage our investment well with a prepared mind even if we plan to deal with it for 100 years.

Thanks for your view, but that is mine, and I don't think am ready to follow the majority beliefs here. I analyze Bitcoin charts both offline and online many times a day and follow its reaction with economic data, so I didn't just jump to this conclusion. I don't also know the reason why you are comparing Bitcoin with gold because I never mentioned gold, they are not in the same asset category even though Bitcoin could give you more money when you own it. Gold is a risk-off asset, while Bitcoin is a risk-on asset based on its behaviour, so no reason to compare them.

Please, refer to the response I shared with Oshosondy for the rest to avoid repetition.

The price of bitcoin should only be speculated if it is short term return that you are looking for. Bitcoin price is volatile. But if it is long term, bitcoin is an hedge against inflation and you can have it instead of having fiat in long term. There is no two reasons that some companies like Microstrategy are buying bitcoin, this is one of the reasons. If you buy bitcoin today, it would be a store of value if you keep it for four years or more.

I understand you quite well and I actually know all you explained as true and also own my Bitcoin for a long-term investment. I'm just telling you how I view my own investment with Bitcoin, it's just like every asset I purchased, they are owned for their ROI only irrespective of how long I keep them, and when they are positive, I win, inflation or not.

I don't have the mindset of pegging it against inflation but earning through it if possible and I will manage it accordingly based on prevailing conditions rather than having the total belief that it will perform against inflation.

It is true that interest rates may be an influential player on the price movement at the present time, but whenever bitcoin prices begin to move forward, many variables will occur as the bullish market will bring more liquidity and therefore interest rates will not have an effect given that the price rise within 6-15 months.

What I really fear is the poor performance of stablecoins and CEXs such as Binance/Coinbase/USDT. If any big problem occurs to Binance/Coinbase/USDT, the upward trend will change and the Bitcoin cycle will be broken directly.
Or random investment in altcoins, which may result in factors such as FTX and LUNA, and thus a broken bitcoin price cycle.

Bitcoin's biggest enemy at the moment is stablecoins and altcoins

I guess the simple explanation is that or as the way I understand it, if FEDs cut interest rates, it causes the price to go up and conversely, if they increased the interest rates, then the price will be affected negatively, thus it might go down.

However, as far as bitcoin halving is concern, not sure if it will have a impact. Remember that the last halving we have, we are in the pandemic and yet throughout that bull run period, the price goes up despite the lockdown and the economy not moving at all during that time frame. So for now, there could be events that might have a financial global effect, but if could not impact the next bull run, in my opinion.

You've just said that lower rates would be good for the prices!
The last halving had these EFFRND:
November 2012  - 0.18
July 2016  - 0.39
May  2020 - 0.05

In all of Bitcoin's history, the previous high for effective rate was at 2.42, it's now 5.33%.
So it's highly improbable the next bull run will happen in an era of cheap money and low inflation!

Cheap money surely, but low inflation may not happen. We are still not where we want it to be and that means that we are still at a high inflation rate and that needs to go down a bit more. I understand that we need to reach to a point where it will take some time, and I think it should be considered a little different.

I get that we are going to have some trouble one way or another, but that doesn't mean that we are going to end up with anything good just yet, it should be a little different. I understand that it's a tough one, but it's going to be a little different in the end. Just realize that it's going to be something that will take some time to lower the inflation and be ready for it when it finally looks like recovering.

I think it was the opposite. I even search it and it seems I am right. It is said that low interest rate means more spending for the people or in other words, less inflation. If the value of the peoples money is huge, they can be able to buy or invest more but you are still right that there are still more people who invest during an inflation but it would be better if people don't wait for it to happen.

Another benefits of investing early is we can earn big income once the price rise more. Bull and Bear markets are already there. They are part of the market and they can come no matter what but I think outside events can affect if how big or small the value that they will provide.

At present the increase in bitcoin is difficult to guess, many factors can affect the increase in bitcoin, halving day that occurs before success makes a significant increase in prices and our hopes will certainly happen again, many things can affect the increase, and in my opinion low interest rates can be a reason People divert the investment to Bitcoin so that the price surge occurs.

Most people predict the price of bitcoin from the previous years and some are close to their prediction, some failed and some were correct. And since the market is unpredictable the next halving is also like that. And now that the price of bitcoin is going down again the halving might begins late this year or second quarter of next, if it doesn't happen late this year then it will not occur early next year.

And from now till December this year is one of the opportunity or the best time to invest in bitcoin because after the halving we will start the bull. Though this coming halving and the bull is my first time in bitcoin cryptocurrency Ecosystem so I don't have too much to say for now. Let me see what will happen then I will also have enough things to say.

Indeed interest rates are always associated with investment, of course the two have something to do with each other, low interest rates can make investors busy choosing to invest, hoping to get big profits.

Of course interest rates can affect investment, if you look at it from the side, as below.

However, don't get me wrong in responding to the quote above, it applies to those who invest in foreign Paluta and fiat forms, it doesn't apply to the crypto market.

As a whole if you look at the various speculations that have occurred about Bitcoin halving, of course interest rates are not a reason to rise for the price of Bitcoin, there are other things that are speculated about the future halving, so interest rates are not the main basis for changes in Bitcoin prices, even if halvings occur.

I agree, interest rates are not the only reason but it is also not nothing anyhow, its going to matter. We could see it change and in order for us to see it change, we need to first see the halving. Without living at least 1+ year of halving, we can't say if interest rates will have any impact on it or not, we could make assumptions but we can't exactly know what's going to happen, and we should reach to a point where its a lot better and we can do a lot better with it as well.

This is of course a situation that will take some time, but it is still possible and it could make it worthwhile as well. Live to see it is the greatest result checker, because it already happened in that moment and you get to see if it was true.

Personally, I do not see that interest rates had a significant impact in the past halving on the price of Bitcoin, at that time there was not much change in interest rates so there was not a significant impact.

The main reason for the high rise at that time was the acceleration of the adoption of Bitcoin by large institutions and the increase in demand dramatically. Do not expect that the price will rise as soon as halving, because even if the value of rewards decreases by half, the halving effect will only appear when the supply in the market decreases and demand increases, and this takes some time.

Therefore, I can say that even with an increase in interest rates, if there is a large demand for Bitcoin, the price will increase, and vice versa, that is, if the interest decreases and the demand decreases, the price of bitcoin will not increase.

The high adoption of the previous Halving that made Bitcoin increasingly known certainly supported Bitcoin to reach ATH. There will be many factors that can affect Bitcoin reaching ATH or not. The new interest rates implemented always put an emphasis on the price of Bitcoin, but that is only a temporary effect. We will see how Bitcoin will be, 2024 will be the year that everyone has been waiting for. It has the same effect or not depending on how the demand for Bitcoin and supply is getting less, this does take time and cannot be seen immediately.

I agree that it is not nothing but also it is not as important as people make it seem like. I mean every time there is a FED call about the interest rates, bitcoin reacts to it so giantly that you would think that it matters the most out of anything. It's not, it is not as important as people think and yet for some reason those same people end up using it like crazy. I get that it will not be simple but you should not be really forgetting how important it is as well.

I think it should be important on the long run. I get that we are not going to end up with a bad result one way or another, so we should not really trust FED interest rates and trade accordingly like all these people, just keep on buying as much as you can.