"Forget the Bitcoin Halving-Cycle Rule"... Major Regulatory and Technological Tailwinds Set to Arrive in Q4 [Crypto Radar]

Bitcoin Becomes a Beneficiary of "Debasement"
Tokenization Moves Into the Institutional Mainstream
Ethereum's Tech Overhaul and Payment Network Expansion

Bitcoin is expected to deliver strong upward momentum this year even without relying on the traditional "four-year halving cycle" theory, according to an analysis. The outlook is that a decline in the value of money, or debasement, driven by surging U.S. government debt, along with regulatory and technological tailwinds in the fourth quarter, will push the market higher.

According to NH Investment & Securities on October 20, Bitcoin has shown short-term volatility amid recent interest rate increases, but investors expect it to have passed its bottom in the four-year cycle. In particular, even without the historical four-year halving pattern, Bitcoin could benefit significantly if the debasement theme gains further prominence.

With U.S. government debt exceeding $40 trillion, it is acting as both a macroeconomic risk for the market and a powerful driver for the digital asset market. U.S. President Donald Trump's pledge to pay $5,000 per person if Republicans win the midterm elections is intensifying market concerns about debasement. Even the belief that artificial intelligence (AI)-driven growth in gross domestic product (GDP) could lower the government debt-to-GDP ratio appears to be wavering amid calls to moderate the pace of AI development.

Bitcoin has historically followed a pattern of rising for three years and falling for one year, with mining rewards cut in half roughly every four years. But the market's underlying structure is changing. According to Shinhan Securities, following the approval of spot exchange-traded funds (ETFs) and a sharp increase in publicly listed companies adding Bitcoin to their treasury assets, the combined holdings of U.S. spot exchange-traded products (ETPs) and companies holding at least 1,000 bitcoins have grown to around 12% of the total circulating supply, increasing the influence of institutional flows. As a result, institutional inflows and outflows, as well as the scale of selling by long-term holders, have become the key factors determining prices, rather than the simple decline in new Bitcoin supply from mining.

Along with these changes in market flows, events scheduled for the fourth quarter are expected to improve the underlying structure of the digital asset market and raise interest in it. In particular, the U.S. Depository Trust & Clearing Corporation (DTCC) is expected to formally launch its tokenization service soon. With numerous global financial institutions participating in the DTCC's tokenization service, real-world asset (RWA) tokenization is expected to become a central market theme.

The launch of a tokenized securities platform under the U.S. Securities and Exchange Commission's (SEC) regulatory sandbox could soon become a reality. The joint venture OKXICE, formed by global cryptocurrency exchange OKX and Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), has submitted an application. Other major platforms are expected to follow suit.

Efforts to establish regulatory frameworks for the industry are also gaining momentum. The Commodity Futures Trading Commission (CFTC) is actively working to strengthen market oversight, including drafting rules for the federal supervisory framework known as "CTX" and the dedicated market "CAM," for businesses providing margin and leveraged trading services. The market views these efforts as a positive development that will eliminate uncertainty.

On the distribution infrastructure front, decentralized exchanges (DEXs) such as Uniswap are adopting "qualified-wallet-only pools" for users who have completed know-your-customer (KYC) checks, aligning with institutional standards. As a result, structures that allow securities firms and fintech applications (apps) to efficiently absorb on-chain liquidity are becoming increasingly established. This upgrading of distribution infrastructure, together with greater participation by institutional financial firms, is seen as a key foundation for transforming the digital asset market, which has relied on short-term speculative capital, into a genuine distribution network for financial assets.

Major technological overhauls to Ethereum, the leading altcoin, are also a key factor supporting the market. Ethereum's Glamsterdam upgrade is expected to significantly improve the network's transaction speed and scalability. It is seen as a timely technological foundation that will reduce network congestion and improve efficiency as the stablecoin and real-world asset tokenization ecosystems gain traction.

"As concerns grow over the U.S. fiscal burden and the long-term value of money, we are seeing more investors consider gold and Bitcoin together," said Park Seong-je, a researcher at Shinhan Securities. "The strength of future gains will depend on interest rates, oil prices, the policy environment and institutional capital inflows."

This content was produced with the assistance of AI translation services.