“In the last halving, I made 3 times my investment, and I can definitely replicate that this time!” Recently, I've been hearing retail friends say this. Without discussing whether it can be replicated, let me ask you a question: Do you know what the core driving logic of the last halving market was? If you don't, then you are very likely to suffer significant losses this time. Today, I will explain the differences between this halving and the last one from the perspective of supply and demand relationships, helping you understand whether “this market can be traded.”
The core driving logic of the last halving market is the perfect resonance of “supply contraction + demand explosion.” First, let's look at the supply side: before the last halving, the annual inflation rate of core cryptocurrencies was 3.6%, which directly dropped to 1.8% after the halving, resulting in a 50% contraction in supply; now, looking at the demand side: at that time, institutional funds were entering the market on a large scale, with a net inflow of institutional funds reaching 3.5 billion within nearly 60 days, while the number of active addresses on the chain grew by 42%, forming a supply and demand pattern of “significant supply contraction and simultaneous demand explosion,” making the market naturally flourish.
This halving has fundamentally changed the supply-demand structure. First, let's look at the supply side: although the contraction in this halving is also 50%, the annual inflation rate has also dropped to 1.8%. However, the current total circulating supply is already 1.5 times that of the last halving—this means that the reduction in new supply after the halving accounts for only 0.9% of the current circulating total, far lower than the 1.2% during the last halving. In simple terms, the impact of supply contraction on the market is much weaker than in the last halving.
Now, looking at the demand side, this is the biggest difference between this halving and the last. In the last halving, the main force on the demand side was institutional funds, which are characterized by 'large scale, stable positions, and strong absorption capacity', effectively absorbing the chips after the supply contraction. However, in the current market, the main force on the demand side is retail funds, and the scale of institutional funds entering is only 40% of that in the same period last time. Retail funds are characterized by 'small scale, unstable positions, and chasing highs and cutting losses', making it difficult to form sustained demand support. More critically, the overall liquidity in the current market has decreased by 32% compared to the last halving, which means that once a large-scale sell-off occurs, the price drop could far exceed that of the last time.
Another often overlooked point is the difference in the macroeconomic environment. During the last halving, central banks around the world were implementing loose monetary policies, and liquidity in the market was very abundant, with a large influx of funds into the cryptocurrency market, creating a dual benefit of 'macro liquidity easing + industry supply-demand resonance'; however, currently, major central banks worldwide are tightening monetary policy, market liquidity is tight, and risk appetite for funds has significantly decreased, making it difficult to have a large influx of funds into the cryptocurrency market to absorb demand like last time.
From the perspective of supply-demand balance, the 'supply-demand matching degree' of this halving is far lower than the last: the impact of supply contraction has weakened, the absorption capacity on the demand side is insufficient, and coupled with the macro liquidity tightening, this determines that the market conditions of this halving are difficult to replicate the brilliance of the last one. My personal view is that this halving market is more like a 'structural opportunity' rather than a 'general rise opportunity'; only those cryptocurrencies with real demand support and solid fundamentals are likely to develop an independent market.
For ordinary retail investors, my advice is: do not blindly replicate the operational strategies of the last halving, but focus on changes in supply and demand data, paying special attention to cryptocurrencies with a continuously growing number of active addresses on-chain, continuous inflow of large funds, and solid fundamentals. At the same time, be sure to control your positions well and avoid full positions; after all, the current market risk is much higher than last time.
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