What’s Driving Bitcoin’s Recent Surge? Trump’s Win or the 2024 Halving?

Bitcoin (BTC) prices have surged to new heights recently, sparking debates among analysts and investors alike about the reasons behind the rally.

While some have pointed to the election victory of former U.S. President Donald Trump as a key factor, others argue that the real driver of Bitcoin’s surge lies in the recent halving event, which has created a supply shock in the market.

What’s Driving Bitcoin’s Recent Surge?

Jesse Myers, co-founder of Onramp Bitcoin, shared his perspective in a tweet, noting that while a pro-Bitcoin government may have acted as a catalyst, the primary reason for Bitcoin’s price rise is the passage of more than six months since the April 2024 halving.

The 2024 Bitcoin Halving: Supply Shock Driving Prices Up

During the April 2024 Bitcoin halving, the mining reward was reduced from 6.25 BTC to 3.125 BTC, which made Bitcoin mining more difficult and reduced the rate at which new coins are introduced into circulation. This halving event intensified the supply shock, with the available Bitcoin supply struggling to meet the increasing demand.

In addition, the introduction of Bitcoin Spot ETFs earlier this year has further exacerbated this demand. On November 11, 2024, these ETFs saw a massive inflow of nearly 13,940 BTC in a single day, while only about 450 BTC were mined during that time. This imbalance between supply and demand has put upward pressure on Bitcoin’s price.

Myers explained that the only way to restore market equilibrium is through price increases, though he cautioned that this could potentially lead to the formation of a new price bubble.

A Predictable Four-Year Cycle

Myers also pointed out that Bitcoin’s price cycles tend to follow a predictable pattern every four years, tied to its halving events. He noted that Bitcoin is the only asset with a supply reduction built into its protocol, which cuts mining rewards in half every four years. This phenomenon has been observed in past halvings, including those in 2012, 2016, and 2020, and it is now happening again.

“While the appearance of price bubbles every four years may seem unusual, it’s simply the nature of Bitcoin’s unique supply structure,” Myers explained.

Bitcoin’s Price and Market Potential

James Chek, an on-chain analyst, also supported this view, comparing Bitcoin to gold. He noted that gold’s market cap grew by around $6 trillion last year, and he predicts that Bitcoin, with its market cap of only $1.6 trillion and a limited supply, is likely to continue its upward price trajectory.

As of November 12, 2024, Anthony Scaramucci, the American investor and founder of SkyBridge Capital, also weighed in, emphasizing that it’s not too late to buy Bitcoin. He pointed out that expectations are growing for Bitcoin to become a strategic reserve asset in the U.S., and he predicts that other countries will likely follow suit.

A Limited Supply and Increasing Pressure

Currently, around 94% of all Bitcoin in circulation has already been mined, with only about 1.2 million BTC left to be mined. This limited remaining supply is putting even more pressure on the supply-demand balance, which could further drive up prices as the available supply diminishes.

With the combination of the recent halving and growing institutional interest, including through Bitcoin ETFs, many analysts believe this surge may be just the beginning. As the supply of Bitcoin continues to shrink and demand rises, the market could experience significant price movements in the near future.

Bitcoin’s role as a store of value and its growing adoption by both individual and institutional investors have positioned it as one of the most talked-about assets in the global financial markets. The next few months will likely reveal whether Bitcoin’s price can maintain its momentum or if the market will face a correction.