BTC - I don't think the Block Reward Halving is priced in...
Is the next Bitcoin Block Reward Halving already baked in to the price?
For those of you that subscribe to the efficient market hypothesis (EMH), they would be saying yep, absolutely it is priced in.
The EMH is an investment theory where prices are said to already reflect all available information.
Meaning that if something is known by the market, it is already baked into the price.
Something like Bitcoin's block reward halving would definitely fit into this definition.
Normally I would mostly agree with the EMH, though I don't fully agree with it. For example, I have seen too many times where investor sentiment/emotion bids up prices or drives prices further down than they "should be".
I don't think it's baked into the price...
On first glance, this sounds crazy.
Investors have had years now to prepare for this block reward cut, why would it not already be reflected in the price?
I can't say for sure why it's not, but was it baked in during the previous halvings?
(Source: https://twitter.com/Bitcoin/status/1209521632261398528)
Looking at both of the previous halvings in the chart above, it certainly looks like it wasn't baked in at all.
The price went up considerably in both instances shortly after the halvings.
My guess is that it all comes down to basic supply and demand.
Right now we are at somewhat of an equilibrium point with bitcoin. The new emissions roughly offset the new demand coming in, which keeps prices relatively flat around $7k.
But what happens when the demand stays constant but the emission rate gets cut in half?
Basic supply/demand economics would dictate that prices would have to go up.
I think prices will go up significantly after this next halving yet again
Yes, the market is different now, there are many futures and options products that didn't exist during the previous two halvings.
And these are great tools for miners to hedge against the halving effects.
Will they make a difference with how bitcoin behaves this time around?
I honestly don't think they will.
I think the demand will not only stay constant at current levels, but actually increase over the coming year or two, and combined with less new supply hitting the market, prices likely have no where to go but up.
If that's the case, this next halving will likely be the catalyst for the next parabolic move in bitcoin's price.
Stay informed my friends.
-Doc
If the following bitcoin production price is or will be true I don’t think it is priced in.
Yep, either price goes up significantly or a ton of miners are going to be turning off the machines.
Read a while back someone speculating that the parabolic run up this last year WAS the run up to halving. Not certain I believe that but that notion does stay in the back of my mind.
Gee, if the BTC halving is as good to us all as the LTC halving was, we will all be in Lambos by July 4 (he growled while rolling his eyes way up in his head)
Yea, I have read the same multiple times. I don't think it is due to the basic supple/demand economics I alluded to in the post. Miners are the largest sellers of bitcoin historically (though in general they have been hodling as of late), with them selling less, and demand staying somewhat constant, prices go up.
This is logical but today there are more big players trying to influence the behavior of bitcoin an all the crypto environment. Wouldn't they have some effect?
Yes, but supply and demand always sets prices in the long run. It can be manipulated for short periods of time, but the market eventually sets the price.
I agree. However, I am getting increasingly nervous because we haven't started to move up yet.
Yes that is a bit worrisome when compared to the past moves, however, I won't be too concerned unless we haven't had a move up by several months after the halving. That is when the supply/demand economics actually start to impact the price. Before is just speculation.
Thanks for this information. I like your Steemit Blog!
Thank you.
An interesting piece of data, mate, and I can cautiously agree with your opinions. Historically, the data shows that the markets always go upwards post-halving, albeit the timing of how long it would take to get there is rather sporadic, so it could take months to years.
As you've said, with more institutional entry and instruments to back up or hedge Bitcoin, the markets could spiral faster than previous ones, though I do hope people won't get too overhyped on an immediate post-halving surge, since I imagine any bull run could take time.
Yea, my guess is that we have a speculative run up into the halving, followed by a decent sized pull back for a few months once the halving actually occurs, and then we have the massive move that is the result of the halving starting several months after the halving and eventually peaking 18 months or so (give or take 6 months) post halving.
That sounds like a pretty solid structure to how it'll go down, and I dare say you're pretty spot on with that.
Thanks for this valuable information.
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