Bitcoin (BTCUSD)

[ap17]

2 days tic toc tic toc.

So far, Bitcoin has experienced 3 halvings.

All three of them have resulted in positive price action in the following year:

2012: +8,839%

2016: +285%

2020: +548%

To understand why the Bitcoin halving isn’t priced in, first we need to understand market dynamics.

Matt explains that in any market, there are two types of sellers:

Forced sellers - Bitcoin miners that have to sell to cover costs

Willing sellers - Everyone else

Forced sellers are price insensitive. Whereas willing sellers will sell at varying price points.

Some will sell at today’s prices, some will hold out for $100,000 and others are waiting until $1,000,000+. (these prices can also change based on market sentiment)

“Here’s what many people are missing: One key impact of the halving is changing the ratio of forced vs. willing sellers in the market.”


Matt Hougan
Let’s break this down with an example.

Currently, Miners produce ~900 new Bitcoin per day.

Imagine a new group of investors come into the market.

And on average, they want to purchase +1,000 BTC per day.

These investors can acquire 90% of their BTC from forced sellers (Miners) and 10% from willing sellers.

But…

After the halving, miners will only produce ~450 new Bitcoin per day.

Now, with the same demand, these investors can only acquire 45% of their BTC from forced sellers. The remaining 55% must come from willing sellers.

“If there is more demand for bitcoin in the future than the market currently expects, buyers will have to chase bitcoin in a different market than the one they encountered pre-halving—a market with half as many forced sellers as before.”


Matt Hougan
Cutting the amount of forced sellers in half is a HUGE deal.

Matt believes the market has severely underestimated the long-term demand for Bitcoin:

“That’s why I find the halving bullish. I think the market has underestimated the long-term demand for bitcoin, for a number of reasons.”


Matt Hougan
One of those reasons being:

“I don’t think the market fully appreciates the size of the opportunity in the ETF market once wirehouses and the rest of the roughly $60 trillion U.S. wealth management industry are able to allocate to bitcoin ETFs, which could start to happen as early as Q3.”


Matt Hougan
Only 2 days to go… 🧨