Is Bitcoin's 2024 Halving Year Beating Past Cycles?

TL;DR

Bitcoin is up about 50% year-to-date in 2024, outperforming all three prior halving years (2012, 2016, 2020), which averaged only 10-20% gains by May. One caveat: 2024's halving landed in April, earlier than past cycles, and it is the first time Bitcoin set new highs before a halving.

Transcript

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Key Insights

• Bitcoin's 2024 year-to-date ROI is outperforming all three prior halving years (2012, 2016, 2020), which by around May were up on average only about 10 to 20%, while 2024 is up roughly 50% off the yearly open.
• The 2024 halving occurred in April, earlier in the year than prior cycles where the halving fell in Q4 2012, July 2016, and May 2020, which partly explains why past years lagged 2024's current performance.
• 2024 marks the first time Bitcoin set new all-time highs before the halving rather than after, a structural difference from every prior cycle that could affect how returns play out.
• Measured as ROI after the halving rather than year-to-date, 2024 sits slightly above 2016 but below both 2012 and 2020, placing the current cycle roughly in between prior halving-year outcomes at around 3% up.
• A Bitcoin-heavy crypto portfolio is expected to outperform most altcoin portfolios because Bitcoin dominance should keep rising, though some individual altcoins still outperform Bitcoin.
• Bitcoin's 2024 ROI of about 50% is well ahead of Ethereum's roughly 30%, illustrating why favoring Bitcoin over ETH has made sense until looser monetary policy arrives.
• Comparing 2024 to post-halving years, the average of 2013, 2017, and 2021 shows 2024 underperforming by a lot, but the average of just 2017 and 2021 tracks closest to where the market currently is.
• Peak-to-peak ROI shows diminishing returns: an early cycle topped near 15x, the next near 3x, and the current cycle has reached about 1.13x, which the speaker hopes to exceed by cycle end.

Questions & Answers

Q: How is Bitcoin performing in 2024 compared to previous halving years?

Bitcoin in 2024 is outperforming all three prior halving years (2012, 2016, and 2020) at this point in the year. By around May, those prior halving years were up on average only about 10 to 20% year-to-date, while 2024 is up roughly 50% off the yearly open, placing it above both the individual prior years and their average.

Q: Why did prior halving years lag behind 2024's performance?

A major caveat is the timing of each halving. In 2012 the halving did not occur until roughly the fourth quarter, in 2016 it was in July, and in 2020 it was in May. In 2024 the halving occurred in April, earlier than all prior cycles. Because past years' halvings came later, their comparable performance lagged where 2024 currently stands.

Q: What makes the 2024 Bitcoin cycle different from earlier cycles?

2024 is the first time Bitcoin set new all-time highs before the halving rather than after it, a structural change from one cycle to another that could have some effect on returns. The halving also occurred earlier, in April. These differences complicate direct comparisons and contribute to disagreement about whether this is a normal or left-translated cycle.

Q: Why does the speaker focus mostly on Bitcoin rather than altcoins?

The speaker focuses mostly on Bitcoin because he believes Bitcoin dominance will continue rising, meaning a Bitcoin-heavy crypto portfolio will likely outperform most altcoin portfolios. He notes some altcoins do outperform Bitcoin, but overall Bitcoin keeps taking back market share. Since 2022 he has expected dominance to increase, unlike 2020 and 2021 when he was more focused on altcoins.

Q: How does Bitcoin's 2024 return compare to Ethereum's?

Bitcoin is up about 50% in 2024, while Ethereum is up only about 30% over the same period. The speaker uses this contrast to explain why being Bitcoin-heavy rather than ETH-heavy has made sense. He believes that until looser monetary policy arrives, Bitcoin will hold up better than most, though not all, other cryptocurrencies.

Q: What does ROI after the halving show for 2024?

When measured as ROI after the halving rather than year-to-date, the picture shifts. 2024 is slightly above 2016 but below the ROI following both 2012 and 2020, placing it in between. Eyeballing prior returns at this point gives figures around 9% up, 9% down, and 14% up, while the current cycle sits at about 3% up since the halving occurred.

Q: What is the debate between a normal cycle and a left-translated peak?

The debate centers on how to measure Bitcoin's peak. Measuring from the November 2021 top suggests Bitcoin is well above prior cycles, while measuring from the April top suggests it has veered off course, supporting a left-translated peak. The speaker acknowledges evidence for both views but leans toward a normal cycle because that is historically what happens and people tend to overcomplicate it.

Q: How do diminishing returns appear in Bitcoin's cycle data?

Measured peak to peak, diminishing returns are clear. An earlier cycle topped out at an ROI of about 15, the following one at around 3, and the current cycle has already reached about 1.13. The speaker says it would be nice to go a bit above 1.13 by the end of this cycle, illustrating how each successive cycle delivers progressively smaller multiples.

Summary & Key Takeaways

• The video reviews Bitcoin halving-year returns across the three prior halving years of 2012, 2016, and 2020. By around May those years were up only about 10 to 20% on average year-to-date, whereas 2024 is up roughly 50% and outperforming each prior halving year individually and on average.

• A key caveat is timing: the 2024 halving occurred in April, earlier than the Q4 2012, July 2016, and May 2020 halvings. Measured as ROI after the halving, 2024 sits slightly above 2016 but below 2012 and 2020, landing roughly in between at about 3% up.

• The speaker favors focusing on Bitcoin because dominance should keep rising, noting Bitcoin's 50% ROI versus ETH's 30%. He leans toward a normal cycle over a left-translated peak, while acknowledging diminishing peak-to-peak returns now around 1.13x and evidence supporting both views.