Bitcoin has multiple long-term and short-term variables that affect its price, and many folks debate what its major correlations are, if any. It turns out, the same factors that affect bitcoin’s price – real rates of inflation, monetary and fiscal policy and market exuberance – also partially determine to which assets is correlated.
Over the long run since its launch, increasing user adoption, ever-strengthening security and the widening network effect have propelled bitcoin’s market capitalization to greater and greater heights. Those are the long-term variables.
The halving periods tend to act as fundamental catalysts for the next bull market within this long-term trend, as new supply gets cut in half while incoming demand remains robust. As long as that demand indeed remains strong, upward pressure builds on its price, and then when it eventually breaks out, momentum traders hop on board with a new influx of demand and drive it up further.
All pre-programmed halving events occurred during periods where bitcoin had been off from its all-time highs for at least a year, and usually more than one year. On the other hand, the year after a halving has always been great for its price, without exception so far (albeit with a very small sample size), and has eventually led to the next blow-off top and a period of consolidation.