Will the Bitcoin halving drive miners to bankruptcy? Will it kickstart another rally or is it "priced in?" Will anything be different this time?
The halving, which comes around every four years and cuts the amount of bitcoin entering into circulation by half, raises a series of questions about how that will impact Bitcoin.
CoinDesk spoke with a number of experts and community members to get their perspective on the range of issues. Here's a sampling, you can read the full article here.
Priced in?
Haseeb Qureshi, managing partner at Dragonfly Capital:
I am a longtime halving nihilist. The halving is *what it means* for bitcoin to be deflationary. It's been priced in since the first time someone bought bitcoin because it has a fixed supply. The timing of the halving has been baked in since Bitcoin was first launched six years ago.
People drawing charts and rainbows and all this nonsense over an event that has deterministically happened four times (on an asset that already goes up almost every single year) is pseudoscientific nonsense. But whatever, it's a good story.
Austin Campbell, assistant professor at Columbia Business School:
As bitcoin gains more of a foothold in traditional finance, events that were drivers of past cycles like the halving will cease to have as much of an impact, if any. Portfolio allocators think in multi-year and multi-decade terms, and the impact of events like the halving will be muted as this market segment grows, just like any market growing from new to mainstream sees volatility due to small idiosyncratic events decrease as liquidity and scale increase.
Not priced in
Edan Yago, founder of Sovryn:
Definitely not priced in. Not even close. This is the most important halving since the first. This halving will bring new assets to Bitcoin in the form of Runes and the coming cycle will see Bitcoin Rollups add scalability and programmability to Bitcoin. Bitcoin block space will go from cheap to the scarcest computing resource in the world.
This time it's different
Ed Hindi, chief investment officer at Tyr Capital:
Bitcoin remains a viable doomsday asset in 2024, as its correlation to gold recently increased, and investors continue to diversify away from traditional financial assets. The ETF is currently spearheading this doomsday rally and we should expect $120,000 to be hit in the coming months as global geopolitics continues to deteriorate and the middle classes continue to find ways to protect their wealth.
Impact on mining
Colin Harper, researcher and writer for Luxor Technology's Hashrate Index:
This halving could be unprecedented with regards to how it affects Bitcoin's total network hashrate. It's plausible that we see no hashrate come offline after the halving, or that we will see the smallest decrease in network hashrate after any other halving event in Bitcoin's history. Mining margins won't be as good after the halving as they are now, obviously, but they won't be horrendous. And if the new Runes fungible token protocol makes a significant impact on transaction fees, then margins will be healthy enough to keep miners with higher costs online for longer than not.
For comparison, Bitcoin's hash rate declined 15% after the 2020 halving, 5% after 2016's halving, and 13% after 2012.
Joe Downie, chief marketing officer at NiceHash:
This halving is different, we will likely see less volatility than previous ones, for a few reasons: one is that Bitcoin mining is far stronger than it has ever been before in terms of hashrate, another is the level of legitimacy Bitcoin has gotten recently due to institutional funds and ETFs, plus the fact that a lot of people are in "wait and see" mode. This makes for a far more stable basis for BTC to hold its current value and gradually increase over the course of this year. There may be some short term volatility during the following week or two after the halving, but I expect things to stabilize quickly after that.
What critics say
Roger Ver, creator of Bitcoin Cash:
Nothing special happened for the last three halvings. I don't expect this time to be any different.
Molly White, author the Citation Needed newsletter:
Although responsible investment advisers will often warn that "past performance is no guarantee of future results", that's largely the kind of thought process that goes into predictions for the halving. "Number went up last time, so number go up again". More sophisticated explainers might delve into supply and demand, suggesting that the gradual closing of the bitcoin faucet amid roughly steady demand is what drives prices higher. Either way, some people are piling into bitcoin in belief of guaranteed double-your-money returns, if not better.
These folks might do well to be a bit more cautious.
Read the full article online...
– D.K.
@danielgkuhn
daniel@coindesk.com
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