The Halving as a Big Non-Story? What Do the Pros Say?
Continuing from yesterday, another factor that accompanies Bitcoin and will become acute this year is the story of the Halving. Bloomberg has collected quotes by industry leaders on the event, which is expected to take place in May 2020. The fact that we even know that the supply of fresh coins will be cut back this year is a great victory for the transparency of Bitcoin's monetary policy.
In a halving, Bitcoin rewards that go to the so-called miners that support the coin's network drop in half to prevent inflation from eroding the purchasing power of the coins. In the previous reductions, the price rose about 8,000% in the year after the 2012 decrease and around 2,000% in the 18 months following the 2016 cut, according to data compiled by Bloomberg.
What do the pros say?
"Unlike most Bitcoiners, I don’t think the halving is particularly bullish. I am of the view that most people with a Bitcoin position understand that it’s capped in supply, so the issuance change shouldn’t make a difference. Also, the halving is perfectly forecastable, so I have a hard time believing that it constitutes an informational shock. Bitcoin supply has been described and understood from January 2009 and has followed the ordained trajectory ever since."
Nic Carter, Co-founder of Coin Metrics
"As Bitcoin is often influenced by momentum thinking -- and the halving is magnified by a transformation of the economic structure -- I’d estimate it will have a positive influence on price."
Dave Balter, Chief Executive Officer of Flipside Crypto
"Many market participants have been asking the question -- is the Bitcoin halving priced in? That’s the wrong way to frame it. A small single digit percentage of the world currently owns Bitcoin. For those that currently own Bitcoin, a large portion of them understand that Bitcoin’s newly issued supply is cut in half every four years. This is likely a significant reason why they own it -- because of Bitcoin’s provable scarcity. For the many billions of people around the world that do not own Bitcoin, few understand this provable scarcity characteristic. So, for those billions, it cannot be priced in. To the extent those billions of people discover Bitcoin in the future and decide to buy some, there will be less new available supply to satisfy that increased demand to purchase Bitcoin."
Travis Kling, Founder of Ikigai Asset Management
We find the perspective of Kling particularly interesting. How can one assume an efficient market if the market has so few participants so far? The halving will in any case give the media the opportunity to point out the positive sides of Bitcoin and to explain the functioning of the original cryptocurrency in detail once again. This could further strengthen the Bitcoin-as-Safe-Haven narrative. But it would also be the perfect time for a state actor to enter the field of cryptocurrencies. Even if that has little to do with Bitcoin per se.