.png){kind=logo}
Bitcoin halving drives long-term scarcity, but short-term prices depend more on the global Business Cycle.
Institutional ETFs now link Bitcoin’s movement closely with traditional assets like Gold and stocks.
Macroeconomic shifts, not just supply cuts, increasingly determine Bitcoin’s market direction.
Bitcoin halving is an event that is pre-programmed, and it happens roughly every four years, or after 210,000 blocks are mined. It is a built-in mechanism in Bitcoin’s code designed to control its supply and mimic the scarcity of precious metals like gold.
During a halving event, the reward that miners receive for adding new blocks to the blockchain is cut in half. This reduces the rate at which new Bitcoin enters circulation. The latest halving occurred on April 19, 2024, when the reward dropped from 6.25 BTC to 3.125 BTC per block.
When a smaller amount of BTC is created, the supply growth slows. If demand remains steady or rises, the limited new supply can create upward pressure on price over time. Thanks to this mechanism, halvings are often seen as bullish events that strengthen Bitcoin’s scarcity narrative.
Each halving event has been followed by a major bull run, but the scale of the price increase has varied. After the 2012 halving, Bitcoin rose by over 8,000% in the following year. The 2016 halving was followed by a roughly 2,800% increase leading up to the 2017 peak. After the 2020 halving, Bitcoin surged more than 600%, reaching over $60,000 in 2021.
However, by the time of the 2024 halving, the market had changed dramatically. Institutional investors, exchange-traded funds (ETFs), and larger trading volumes have made Bitcoin behave more like a mainstream financial asset. This maturity reduced the element of surprise around halvings.
By April 2025, Bitcoin was trading around $83,000, up about 31% from the halving-day price of roughly $64,000. Earlier cycles had seen far larger returns over similar timeframes, suggesting that halving’s influence might be weakening as other macroeconomic factors take precedence.
The business cycle refers to the natural expansion and contraction of an economy over time. It is typically divided into four phases: expansion, peak, contraction, and trough. These cycles are influenced by interest rates, inflation, consumer spending, and central bank policies.
When the economy expands, liquidity increases, interest rates are low, and investors are more willing to take risks. In these environments, assets like Bitcoin tend to rise as investors seek higher returns. In contrast, when central banks raise rates to control inflation or when recessions occur, capital moves away from risky assets, and Bitcoin often falls alongside stocks and commodities.
In 2024 and 2025, Bitcoin’s behavior increasingly mirrored the broader business cycle. For example, when the Federal Reserve signaled possible interest rate cuts in mid-2025, BTC rallied strongly, briefly touching new all-time highs above $124,000 in August 2025 and again in early October near $126,000. Investors interpreted an easier monetary policy as a green light for risk assets, including crypto.
Also Read: Bitcoin Dominance Drops: What It Means for Altcoin Investors in 2025
While halving changes Bitcoin’s supply, the business cycle affects demand dynamics. These two forces often interact rather than compete.
The halving’s supply shock unfolds slowly. It reduces the amount of new Bitcoin entering circulation every day, but it doesn’t immediately change how much investors want to buy. By contrast, business-cycle forces, such as a change in interest rates or inflation expectations, can instantly affect global demand and investor sentiment.
For example, a halving might theoretically make Bitcoin scarcer, but if interest rates are high and liquidity is tight, investors might not have the capital or appetite to buy risk assets. On the other hand, during periods of economic expansion or when central banks are cutting rates, the halving’s supply limitation can amplify bullish trends and fuel stronger rallies.
After the 2024 halving, Bitcoin price gradually increased, supported by both the reduction in new supply and by broader economic optimism. By October 2025, Bitcoin was trading around $108,000–$109,000, significantly above its pre-halving level.
Market analysts credit this growth largely to institutional demand through newly approved spot Bitcoin ETFs, improving liquidity, and expectations of lower interest rates in 2025. These macroeconomic drivers appear to have played a more immediate role in Bitcoin’s upward movement than the halving itself.
At the same time, on-chain data showed miner selling pressure decreasing as less new Bitcoin was being issued, reinforcing the idea that halving does tighten supply, but only meaningfully impacts prices when combined with favorable macro conditions.
It is observed that Bitcoin isolation trading does not occur in modern markets. It moves in tandem with broader risk assets, including tech stocks and commodities, and is now deeply connected to global capital flows.
Business-cycle changes can cause huge shifts in investor sentiment. These movements hide the slower, predictable effects of Bitcoin’s programmed halvings.
The sheer scale of institutional capital that is involved in the crypto market also amplifies macro effects. Large asset managers, hedge funds, and ETF providers move billions of dollars based on global liquidity conditions. When that liquidity expands, Bitcoin benefits. When it contracts, Bitcoin suffers.
Even though the business cycle may dominate short-term price movements, the halving remains essential to Bitcoin’s long-term identity and value.
This ensures that Bitcoin supply remains capped at 21 million coins, reinforcing its role as a deflationary asset. Each halving pushes Bitcoin closer to this ultimate limit and ensures that it remains scarce.
It affects the mining ecosystem. After each halving, miners with higher operational costs may struggle to stay profitable and are sometimes forced to shut down. This temporary drop in mining power can affect the Bitcoin network’s hash rate and lead to short-term supply adjustments.
The halving continues to serve as a psychological and narrative catalyst. Investors and media attention around halving events often reignite public interest in Bitcoin, which can attract new buyers, especially during supportive macroeconomic conditions.
Also Read: Bitcoin May Drop Again Before Reaching New All-Time Highs
Bitcoin’s price movements are moulded by both internal factors, like the halving, and external factors like the business cycle. But in today’s market, the business cycle appears to have a stronger and faster influence.
The halving sets the stage for long-term scarcity by controlling supply. The business cycle determines how that scarcity is valued by influencing investor demand, liquidity, and macroeconomic sentiment.
The events from the past show this clearly. Bitcoin’s latest halving created a slower issuance rate, but the real price momentum came when macro conditions turned favorable.
Ultimately, Bitcoin halving defines the long-term economics of the network, while the business cycle drives its short-term market behavior. Together, they form the rhythm of the crypto market.
1. What is Bitcoin Halving?
Bitcoin Halving is a programmed event that occurs roughly every four years, cutting miners’ rewards by half and reducing the rate of new Bitcoin entering circulation.
2. How does the Business Cycle affect Bitcoin’s price?
The Business Cycle influences investor demand for risk assets. During economic expansion and lower interest rates, Bitcoin often rises; during contractions, it usually faces pressure.
3. Why is Bitcoin compared to Gold?
Bitcoin is often called “digital gold” as both assets have limited supply and are viewed as hedges against inflation or currency devaluation.
4. What role do ETFs play in Bitcoin’s price movement?
Spot Bitcoin ETFs make investing easier for institutions and retail investors, boosting liquidity and linking Bitcoin’s price more closely with broader financial markets.
5. Which has a greater impact on Bitcoin, Halving or the Business Cycle?
While halving influences long-term scarcity, the Business Cycle currently has a stronger short-term impact by shaping demand, liquidity, and investor sentiment.
Join our WhatsApp Channel to get the latest news, exclusives and videos on WhatsApp
_____________
Disclaimer: Analytics Insight does not provide financial advice or guidance on cryptocurrencies and stocks. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. This article is provided for informational purposes and does not constitute investment advice. You are responsible for conducting your own research (DYOR) before making any investments. Read more about the financial risks involved here.
