Do Bitcoin halvings spark BTC price rallies, or is it US Treasurys?
An intriguing chart suggests a close relationship between the performance of U.S. 10-year Treasurys and Bitcoin price rallies that occur after a "halving" event. Bitcoin halving events are programmed to occur approximately every four years, reducing the rate at which new Bitcoins are created. These events often lead to significant price rallies in the cryptocurrency. The relationship between U.S. 10-year Treasurys and Bitcoin halving price rallies could be interpreted in several ways: 1. Economic Uncertainty: When there is economic uncertainty or market volatility, investors may seek safe-haven assets like U.S. Treasurys, causing their prices to rise. At the same time, some investors may view Bitcoin as a store of value and a hedge against economic instability, leading to increased interest in the cryptocurrency. 2. Monetary Policy: The U.S. Federal Reserve's monetary policy and interest rates can impact both Treasurys and Bitcoin. When the Fed lowers interest rates, Treasurys may become less attractive, potentially driving investors towards alternative assets like Bitcoin. Additionally, the halving events, which reduce the rate of new Bitcoin creation, can influence supply and demand dynamics, contributing to price rallies. 3. Speculation and Sentiment: The price of Bitcoin is heavily influenced by investor sentiment and speculative trading. Positive sentiment surrounding a Bitcoin halving event, combined with favorable conditions in the Treasury market, could contribute to price rallies. Conversely, negative sentiment or economic factors could have the opposite effect. It's important to note that correlation does not necessarily imply causation, and financial markets are influenced by a multitude of factors. While the chart may show a correlation between U.S. 10-year Treasurys and Bitcoin halving price rallies, it's crucial to consider other macroeconomic, geopolitical, and market-specific factors when making investment decisions. Additionally, the cryptocurrency market is known for its high volatility and speculative nature, so investing in Bitcoin carries risks that should be carefully evaluated.
David Becker 
The relationship between Bitcoin's price and U.S. Treasury yields has been a subject of interest due to historical data and the underlying rationale. Some have suggested that when investors seek safety in government-issued bonds like U.S. Treasurys, Bitcoin, which is often considered a risk-on asset, tends to perform poorly.
An interesting chart has been shared on social media, suggesting that Bitcoin halvings have coincided with "relative local lows" in the 10-year Treasury yield. This correlation is intriguing, but it's important to note that the author of this analysis emphasizes that the correlation should not be seen as a direct causal link between Treasury yields and Bitcoin's price.
The analysis also points out that over 92% of Bitcoin's supply has already been issued, which implies that daily issuance is unlikely to be the factor "propping up the asset's price."
It's crucial to acknowledge that humans tend to spot correlations and trends, whether they are real or coincidental. The chart mentioned in the analysis shows that during Bitcoin's first halving, the 10-year Treasury yield had been steadily rising for four months, making it challenging to attribute that moment to a pivotal point for the metric. However, before the first halving, Treasury yields dipped below 1.60%, a level not seen in the previous three months.
The analysis also highlights the third Bitcoin halving in May 2020, where yields dropped below 0.8% about 45 days before the event and remained at that level for more than four months. However, it's challenging to claim that the 10-year yield hit its lowest point near the third halving, especially when Bitcoin's price increased by only 20% in the subsequent four months.
The conclusion drawn is that trying to attribute Bitcoin's bull runs to specific events with undefined end dates lacks statistical merit. This suggests that the correlation between Bitcoin's halving events and Treasury yields may not be as direct or significant as initially suggested.
The analysis also emphasizes that no two Bitcoin rallies are the same, even when they follow halving events. For instance, a significant Bitcoin rally occurred between October 2020 and January 2021, about five months after the halving. During that time, the Russell 2000 Small-Capitalization index outperformed S&P 500 companies, indicating that investors were seeking higher-risk profiles. This suggests that the rally was associated with a momentum toward riskier assets rather than trends in Treasury yields four months prior.
In summary, while the analysis raises interesting questions about the macroeconomic factors at play during Bitcoin price rallies, it suggests that correlating Bitcoin's performance with a single event or economic metric may oversimplify the complex dynamics of the cryptocurrency market. A more nuanced understanding of the factors influencing Bitcoin's price is necessary, considering the multifaceted nature of the cryptocurrency market.
