LTC fell instead of rising. Will BTC halving usher in a bull market?

At 23:00 on August 2, the block height of Litecoin (LTC), once dubbed "Bitcoin's gold and Litecoin's silver", reached 2,520,000, and the block reward was officially halved, with the mining reward reduced from 12.5 LTC to 6.25 LTC.

Litecoin’s official Twitter account also posted a tweet to celebrate.

However, the market poured cold water on it, and the price of LTC continued to fall, down 7% in 24 hours.

Although a suitable explanation can be given, that “all good news is bad news”, and everyone will sell after the official halving to end their profits, the key point is that LTC did not rise much before the halving, and it just fluctuated in sync with the market. Therefore, most people did not “sell for profit” but “cut their losses helplessly”.

Neither digital silver nor the halving narrative has been able to stimulate the price of LTC. Of course, what everyone is more concerned about is whether there will be a chance for Bitcoin halving next year?

In everyone's view, Bitcoin halving is undoubtedly a deterministic event that directly leads to price increases, but "correlation" does not equal "causality."

Judging from the timing of Bitcoin halving, the U.S. stock market is also rising almost synchronously. It is impossible to say that Bitcoin halving leads to the rise of U.S. stocks, or to reinterpret it as "the rise of U.S. stocks drives the rise of Bitcoin."

The price depends on both supply and demand. After three Bitcoin halvings, the impact of Bitcoin halving on supply has become smaller and smaller. After the Bitcoin halving in 2024, the reward for a single Bitcoin block will change from 6.25 to 3.125.

So, what really determines the price of Bitcoin will be demand, that is, whether there will be new external funds flowing in.

Looking back at the Bitcoin bull market that started after the halving in 2020, the reason that everyone may associate with it is not the Bitcoin halving, but the "epidemic" and the "Federal Reserve's massive money printing." Under extremely loose liquidity, U.S. stocks soared, and a large amount of funds entered the Grayscale Bitcoin Trust. Grayscale continued to buy Bitcoin. After that, Tesla also bought Bitcoin, driving the entire market into a frenzy.

Therefore, where the “money” comes from is the key to determining whether there will be a crypto bull market or not.

Does that mean that the Bitcoin halving event is not important? No, the Bitcoin halving still has strong "narrative" and "expectation" value.

In the crypto market where fundamentals are almost nonexistent, price fluctuations are often driven by “narratives” and “favorable expectations.” It turns out that narrative value is often effective.

When everyone is willing to believe that "Bitcoin halving" will bring about a bull market, then everyone will rush to buy, thus truly bringing about a bull market.

This is also what Soros calls "reflexivity."

The same is true for the stock market, which is also a voting machine. In the short term, the final factor that determines whether a stock goes up or down is the number of people who buy the stock, not the company's performance. The more people buy, the more the stock goes up. Therefore, when buying stocks, most people actually think about whether others will also think that the stock is good and whether they will also buy the stock.

The financial market is the result of the game of everyone's consciousness. I think about what others think, and others also think about what I think.

Under reflexivity, asset prices will never be equal to their value itself. Most of the time, they are in an inflated state. As the price continues to rise, people will think that the stock is great and will continue to buy it.

This cycle repeats itself until the bubble bursts, and the same goes for the decline, which determines that prices always swing around value, from one extreme to another.

Therefore, from the perspective of the overall industry, only when most people believe that "Bitcoin halving" will bring about a bull market, may there be a real bull market.