Will the halving boost the price of Bitcoin: Bulls vs Bears
Tags: Cryptocurrency, Bitcoin Mining, Bitcoin Halving, Bitcoin, Btc

Erik Voorhes, CEO of ShapeShift, told that the halving is a sign of a healthy market. “It demonstrates a fundamental difference between Bitcoin and fiat: predictability and transparency,” he said. Moreover, it “demonstrates that predictable math can substitute for the subjective whims of politicians and bankers.”

“With fiat, nobody knows how many dollars exist, or how many will be created next year, and as the halvening demonstrates, with Bitcoin, everybody knows exactly how many Bitcoins exist, how many will be created next year, and even what the inflation schedule will look like 20 years from now.” Whether that makes number go up, Voorhes didn’t say.

The bear case: the halving is already priced in

Others disagree with the optimistic scenarios outlined above. Nic Carter, a partner at Castle Island Ventures, is one of those predicting a more bearish outlook. He told he doesn’t believe in the “halving catalyst,” and said that cutting the mining rewards in half will hurt miners, disincentivizing them from powering the network. “It’s going to make marginal miners unprofitable,” he said. “Most miner revenue still derives from issuance, so if issuance cut in half, revenue is effectively cut in half,” he added.

Carter also said the halving means that the market for ASICs (bespoke mining PCs) and other ancillary businesses-like mining pools and hosting companies-will be substantially reduced. “I don’t expect fees will compensate for the halved rewards, and it seems eminently unlikely to me that the price is going to spontaneously double to account for the reduced issuance,” he said.

“It defies sense,” he said. Instead, he thinks the halving is already “priced in”: “Information that is market-moving becomes priced in before the event occurs, if it is known,” he added.

“Information that is market-moving becomes priced in before the event occurs” — Nic Carter

David Gerard, author of Attack of the 50 Foot Blockchain is also pessimistic about the halving. “The halving has no significance,” he told . “It’s a narrative trying to give the impression that Bitcoin is going to the moon-when the price is still entirely explained by whales burning the margin traders, as it has all through 2019.” The halving’s main effect, Gerard argued, would be to make it less economic to be a Bitcoin miner. “That’s good, because proof of work crypto mining is a crime against humanity,” he added.

Joe Lallouz, CEO of New York-based blockchain company Bison Trails and founding member of the Libra Association, is on the fence. On the one hand, he said: “History doesn’t dictate the future,” adding, “Just because it’s happened every other time doesn’t mean it will happen [again].”

“Bitcoin has halvened on a predictably set schedule and it’s baked into the protocol” — Joe Lallouz

“Bitcoin has halvened on a predictably set schedule and it’s baked into the protocol,” Lallouz added. “In perfect markets or rational market scenarios, you would imagine a world where the crypto economy has already somewhat adjusted to the fact that Bitcoin will halve this year.”

Crypto’s only getting bigger-Bitcoin’s market cap in 2016 was around $8 billion, a figure that’s since increased to about $170 billion. “The more people are involved, the more likely that the crypto economy has accounted for the fact that Bitcoin is going to halve its rewards this year,” Lallouz said.

However, Lallouz qualified his remarks, noting that, “people don’t act rationally and markets aren’t perfect,” he said. That’s particularly apposite given that this is the crypto market we’re talking about-where common sense goes out of the window.

Lallouz conceded that there’s likely to be some sort of price shift like those seen historically in Bitcoin. “But with it being such a leading indicator for the crypto ecosystem,” he added, “we could see a market cap or price jump for the whole ecosystem.”

History will be written by the victors.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.