A Bitcoin Halving Happened 1 Year Ago. Was It a Catalyst for the Leading Crypto?

Bitcoin (CRYPTO: BTC) hit a value of more than $100,000 last year, for the first time ever. Did the fourth Bitcoin halving event prove to be a positive catalyst for the cryptocurrency and its valuation? Or has its rapid rise in value had more to do with other factors?

How Bitcoin has done since the halving event

Bitcoin's big selling point is its scarcity. And every four years, the rewards of Bitcoin mining are halved. It's bad news for miners, but it slows the rate at which new tokens enter circulation, thereby helping maintain Bitcoin's scarcity.

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Bitcoin's value sometimes rises after a halving, prompting investors to buy the digital currency beforehand. But did that happen after the last halving event, which took place on April 19, 2024? Here's a look at Bitcoin's price in the months following the event.

Calculations by the author. Source: Yahoo! Finance.

While Bitcoin has risen since the halving event, the rise really began only after Donald Trump, who campaigned as a crypto-friendly president, won a second term.

Relying on patterns and charts is a dangerous strategy

Stocks and cryptocurrencies often move in relation to new developments in the market. And what happened in the past won't necessarily happen again.

As usual, the 2024 Bitcoin halving event was planned and would have been priced into the digital currency's valuation even before it happened. The scarcity was not new or unexpected, so investors shouldn't have expected it to have an immediate impact on Bitcoin's valuation, regardless of what may have happened in previous years.

The real catalyst behind the digital currency's surge in value was due to something that wasn't priced in -- the election win of a president who was looking at loosening restrictions in the crypto world, and even setting up a bitcoin reserve.

Investors should remain careful with crypto

Bitcoin has hit record highs in recent months, but that doesn't mean it's destined to continue going up in value. This is a speculative investment, and favorable policies from President Trump may lead to greater use and acceptance of the digital currency, but there's no way of knowing.

Some investors call Bitcoin "digital gold," but it has not lived up to that name this year, as the cryptocurrency has declined right along with the S&P 500. At the same time, the price of gold has been hitting record levels this year as many investors are craving safe assets. Although it has been picking up steam in recent days, Bitcoin's proving to be as volatile as ever; it's a safe investment only when compared to other cryptocurrencies.

For the vast majority of investors, that's not safe enough. Unless you have a high risk tolerance, you're likely better off pursuing growth stocks than taking a chance on Bitcoin or any other cryptocurrency. With the markets still on shaky ground, speculative investments could be particularly vulnerable to sharp and sudden sell-offs this year.

It might be tempting to buy Bitcoin especially as it gets hot and rises in value, but investors should tread carefully with the cryptocurrency as its movements can be unpredictable. And with a lot of question marks remaining around the economy, there's still plenty of risk in the markets right now.

Relying on safe businesses with strong growth prospects is going to be a more tenable option for investors, especially those who are risk-averse.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.