As the Bitcoin (BTC) halving approaches in just a few hours, there’s debate among analysts about whether this significant event has already been factored into the cryptocurrency market’s current price.
According to Bitwise CIO Matt Hougan, the answer is yes – but it comes with some important nuance.
The Bitcoin Halving And Efficient Markets
On Twitter last Friday, Hougan admitted that the upcoming halving was a well-recognized and anticipated event for all market players.
At block 840,000 in the Bitcoin network, the new Bitcoins added to each block will decrease from 6.25 Bitcoins to 3.125 Bitcoins. This change results in approximately 450 fewer Bitcoins being issued daily.
Due to the fact that this adjustment has been built into Bitcoin’s network from the start, the Efficient Markets Hypothesis implies that the current market price of Bitcoin should have taken this upcoming halving into account.
In Hougan’s opinion, the statement holds generally. However, he points out that proponents of the Efficient Market Hypothesis overlook the fact that: current bitcoin prices are based on the market’s current estimation of future demand.
Hougan’s company, Bitwise, has sponsored the creation of one of the recently introduced US Bitcoin spot ETFs. These ETFs have attracted over $12 billion in investment since their launch.
In recent weeks, Hougan’s predictions of increased flow into ETFs have come to a standstill. However, based on his past analysis, it is anticipated that a renewed wave of demand will emerge among professional investors for these ETFs within the next two years.
After the Bitcoin halving event, the influence of the second price wave could be more pronounced due to the shift in types of sellers in the market.
Forced Seller VS Willing Sellers
According to Hougan’s explanation, Bitcoin miners serve as the initial sellers of newly mined Bitcoins. Due to their significant operational expenses, they are compelled to sell their BTC at any given market price.
After the mining halving event, the proportion of bitcoins offered for sale by miners is expected to decrease significantly. In contrast, the number of coins put up for sale by voluntary sellers, who sell at their own discretion and often seek higher prices, will increase substantially.
“In my opinion, the ongoing reduction in the supply of new bitcoins being created (halving) is a positive sign. I believe the market has underestimated the continued interest and demand for bitcoin in the long term. Consequently, I’m optimistic about the price as more buyers, who don’t need to sell their coins, will be competing for a smaller supply.”
The search volume for “Bitcoin halving” on Google has reached an all-time high, reflecting a surge in interest and anticipation surrounding this significant Bitcoin event.
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2024-04-19 21:33