Raoul Pal Disputes Bitcoin Halving Theory

Was the Bitcoin halving ever that important to Bitcoin’s all-time highs? Raoul Pal doesn’t think so.  


  • Raoul Pal’s Thoughts
  • What This Means For Bitcoin

Raoul Pal’s Thoughts

Famed investor Raoul Pal shared his thoughts on the Bitcoin halving and macro influence over the Bitcoin cycle. “Is the accepted narrative of the BTC Halving cycle what drives the BTC cycle (and all crypto) or is it the macro?,” Pal said, before adding, “Im starting to think it’s all about the macro.”

Before this recent recent bear trend, there wasn’t much of a debate over how much of an influence the Bitcoin halving cycle — which sees miner rewards shrink. It was largely accepted as a major factor considering how similar the 2021 run was to the 2017. Though, the same could be said about the similarities between Bitcoin’s price and macro factors.

Credit: Rauol Pal Twitter.

As Pal points out in this chart, which compares YoY M2 deviation versus crypto market cap, there is a strong correlation between the two. As you can see, the market cap highs of 2013 2017 and 2021 all collapsed in the folowing year. Certainly the performance isn’t the same between the cycles. But when the macro flatlines so does crypto.

“That suggest[s] that liquidity and currency debasement are the predominant drivers, as opposed to supply,” Pal noted.

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What This Means For Bitcoin

We wrote about something similar to this back in May during the beginning of Bitcoin’s downtrend — back when falling under 30k felt like a tragedy.

“One of the widely held beliefs around crypto is that it’s been on a tight four-year cycle based on Bitcoin’s halving. That might not necessarily be incorrect, but we might be seeing a parallel between now and 2018. Back in 2018, when crypto fell off massively, it was understood to be due to the boom-bust cycle. However, interestingly enough, 2018 was a really bad year in equities as well. In fact, CNN called it the worst year in a decade. “

As we pointed out then, the parralels are striking. Crypto has largely followed macro this year. As interest rates changed, and a war sprung up, the Bitcoin as inflation hedge never materialized. It was just like any other risk-on asset. But, that’s not necessarily a bad thing.

Considering how early everything is in crypto, there’s still time for hard money to become self-actualized. Beyond that, this demonstrates that Bitcoin is a part of the investment cycle. It’s an actual asset that investors seek whenever the macro tells it too.

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