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Bitcoin Halving: Why Correlation Doesn’t Equal Causation

The Bitcoin halving is unequivocally the one thing that’s expected to cause price to increase, according to the masses.

In this article, we’ll refute — with evidence — why the block reward halving is nothing more than a correlation, not causation of bull markets.

Is The Bitcoin Halving Bullish Or Bullshit?

Bitcoin price continues to meander mostly sideways for going on its sixth month. Few expect any type of movement to the upside until after the next block reward halving. The recurring event happening every four years, is scheduled for approximately April 2024.

Is the halving responsible for rallies? | BTCUSD on

Looking at the 1M BTCUSD price chart, it is very easy to see why, upon visual inspection, one might assume that Bitcoin rises after the halving and that it is pretty much a sure thing at this point.

Especially when you consider the idea that slashing the block reward to miners could theoretically throw off supply and demand.

Bitcoin halving

Does it also boost tech stocks? | BTCUSD on

Why Does The Block Reward Reduction Boost Tech Stocks?

But why then, upon that same visual inspection, did the Bitcoin halving cause the Nasdaq 100 to go up? The same visual correlation exists, up until recently, where the NDX has been ripping higher.

This disputes that correlation does not in fact mean causation, as this would suggest that the cause of the stock market rising would also be the halving, which is simply not true.

Bitcoin halving

Risk-on trends are strengthening | BTCUSD on

Why BTC Won’t Wait Around, If Stocks Set New ATH

Using the Average Directional Index to gauge overall trend strength, we can see that historically, the Nasdaq trend strength has risen above 20 precisely around the time of the Bitcoin halving.

This time, however, it’s strengthening early, and if it pushes above 20, new all-time highs in the stock market become more likely. With the NDX only a short distance from a new all-time high, it could happen sooner than later.

Bitcoin halving

The strongest pre-halving reading | BTCUSD on

The Average Directional Index usually only strengthens on the 1W timeframe to the degree it has after the Bitcoin halving. Yet, here it is, with one of the highest weekly readings on the ADX ever.

This is the Nasdaq ADX we are referring to in these charts, but the correlation coefficient between NDX and BTCUSD remain at strong positive and growing on the highest timeframes. Simply put, there is evidence that if the stock market makes new all-time highs before the Bitcoin halving, that BTCUSD will do so also.

This chart and entire excerpts originally appeared as premium content in Issue #14 of CoinChartist (VIP). Subscribe for free. Upgrade for premium to read the rest of the content.

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