The impact of halving on Bitcoin price is an ongoing debate that occurs with every halving event. Below are the current team’s bullish, bearish, and neutral views on the impact of halving on BTC price.
Bullish view: The 50% reduction in Bitcoin block rewards makes Bitcoin more scarce as an asset overall while reducing the absolute amount of miner selling. Miners have always been considered forced sellers of Bitcoin because these operations are capital intensive and Bitcoin sales are the main source of income for miners. As a result, miners always sell part of their block rewards for fiat currency to pay for operating expenses such as energy, labor, debt, and new machines. Many believe that the reduction in supply growth corresponding to the reduction in selling pressure from the mining community led to an increase in the value of Bitcoin after the halvings in November 2012, July 2016, and May 2020, and that the same may happen after the fourth halving. Market participants who view the halving as bullish sentiment for price also use the widely circulated stock-to-flow model to quantify the impact of Bitcoin's supply reduction on price. Proponents of this view generally believe that investors are not properly factoring in the halving in the current Bitcoin valuation.
Bearish View: As Bitcoin price approaches its all-time high for the first time in history, market participants who view the halving as bearish sentiment for Bitcoin price believe that the market has already adjusted to the first three halvings and has already priced in this event. Prior to the last two halvings, BTC was down more than 42% from its previous all-time high. In fact, at this stage in Bitcoin's supply schedule, the bull runs of 2017 and 2020 have not yet begun. The impact of each halving on Bitcoin supply dynamics is bound to be reduced by half, and the impact will decline over time. For example, in absolute terms, a reduction from 900 BTC per day to 450 BTC per day is much smaller than a reduction from 7,200 BTC per day to 3,600 BTC per day (the first halving). Considering that Bitcoin's current daily issuance of 900 BTC is negligible compared to the daily circulation of the asset, the impact of an additional 450 BTC per day after the halving will be minimal on the BTC price. In addition, bears believe that the reduction in miner income may cause chaos in the mining industry and make the Bitcoin network less secure.
Neutral view: The efficient market hypothesis suggests that past and future halvings of Bitcoin are contrary to "new information" and cannot be considered supply shocks. Bitcoin's transparent and predictable issuance schedule should always be reflected in the market. The bull market after the halving may be more related to changes in demand than changes in supply, or even more related to factors such as global market liquidity and central bank interest rates.
Analyzing the past three Bitcoin halving events, the price of Bitcoin has risen within six months after each halving event.
What do you think? Welcome to discuss.
I still say that if you come to me, I will take you ashore and you just lie down.
Friends who deduct 8 in the comment section can enter the Sheep Village!
Brother Chuang will not let my fans miss out on this bull market!
#BTC #MERL #ENA #PUPS
