Replies (38)
I don't think so.
View quoted note →Supply cut in half, all else equal we should expect price to go up no?
Halving is one of the factors that will potentially drive the price of BTC, but NOT in seclusion. Yes, it will result in declined mining revenues, but keep in mind difficulty levels will also be high come 2024. As miners exit due to reduced incentives, transactions in the mempool will take longer and cost more, hence increased BTC price.
It would be super cool if this was written in a sense that people could understand it.
The halving narrative is overrated and already priced in. The market is aware of the supply schedule, and it discounts all public information back to the spot price.
Nothing known in advance can jolt the spot price. Mining is not the only supply side pressure on spot prices, plenty of sellers on the way up.
Treat lightly, and own what you can do without.
Bitcoin is in high correlation with liquidity, however, I believe that the absolute price increases are over 90% influenced by halving.
The reason why global liquidity has a low causal relationship to the total increase, but does correlate strongly to BTC price is because of how small fraction of total supply is chasing Bitcoin.
We can have brutal deflation and still if just 0.1% of the system wants to go to BTC, the price will brutally increase and vice versa.
We are looking at two systems that interact with each other but have vastly different amounts of liquidity, oders of magnitude differences.
That is why common analytical tools offer very little predictive capabilities.
Meanwhile something like housing market which is paired to the credit system almost 1:1 is very very easy to predict.
And it is easy to predict because the system is so big that the predictions cannot be priced in as soon as information is here. Even if we all knew what was going to happen with credit, bonds, housing market etc. in 1 year, it would be impossible for us to price it in immediately because of how much time is needed to produce these moves in real world.
That is why credit/housing system is inefficient and Bitcoin is very efficient. One can be predicted and you have months to act and the other cannot.
Housing can go parabolic long term but it can never ever go up 10x within a year unless the system breaks down completely.
The interesting thing is that, something HAS to happen. Either price goes up or difficulty goes down.
There is another path. Difficulty goes down.
But most probably what’s going to happen is a mix of both price up and difficulty decrease.
Yes.
But the effect is relative. BTC halving only affects new supply but there is also BTC in circulation.
The total supply will not reduce by 50%, it will reduce by whatever the 50% of new daily supply was in total BTC traded that day.
That M2 % change chart is interesting. Bitcoin is the less volatile asset compared to fiat, which is the opposite of the dominant narrative.
I also noted that it appears bitcoin is widening the spread with each cycle. Most of the increasing gap is coming from bitcoin dropping less than fiat.
That chart basically says we already have the monetary stability future we are predicting. The instability we are seeing is mostly because we are using a constantly changing ruler to measure.
TLDR; bitcoin doesn't get measured, bitcoin is the ruler. The future is now old man.
IMHO - key driver of bitcoin price action is and always will be global liquidity.
This 👆
Along with Lyn’s point that all other factors *aren’t* held equal. Global liquidity will change over time, and if/when it coincides with a halving, it also contributes to NGU.
It’ll be interesting to watch the first cycle that doesn’t correspond with QE, low interest rates, etc., and see how it differs from previous halvings
Commodity prices find the marginal cost of production (ability to acquire). Either via exchange or mining. If the cost to produce bitcoin via mining doubles overnight, the market may add more buying pressure to the exchange side, therefore pushing up the price.
This is why having the halving on US presidential election years was a genius choice by Satoshi. Incentive is to stimulate that year to help yourself in the election. Why the debate will live on for more cycles.
I have more cycles?
🫂
Great insight. One thing tho - doesn’t the fact that FTX fraudulently sold tens of thousands of paper bitcoin put a big asterisk on the peak of the 2021 bull run? It’s hard to say how much damage that really did. I have a hard time looking back at those charts bc the price was being held down by a low integrity scammer, SBF.
@npub1clwv...xhme could you make a chart of this?
Difficulty always adjusts to the total computing power of the network.
Exactly. If the price doesn’t go up, miners go bust, difficultly goes down.
Lyn your book is amazing, I’m halfway through and feels like I’ve already learned more about macroeconomics by reading the book than with my master’s degree in BA
Also self-fulfilling prophecy will be a key driver IMO
The hodl waves are especially potent now because we have passed 92% in circulation.
It's hard to capture the absolute scarcity in any one model.
As a bitcoiner I tend to assume the same thing.
However when I talk to literally anyone else their general lack of knowledge around bitcoin is astounding.
I'd like to see what percentage of americans think the following.
1. Bitcoin is a company.
2. Bitcoin has a maximum supply.
3. Bitcoin will never reach all time highs again.
I would guess a return of +50% incorrect answers to each question, but maybe I just live in a low IQ jurisdiction 😂
Don’t think it’s possible to price in the halving accurately. You know it’s coming, but it’s not clear what its effect is, so the market punts on it or is just guessing.
The fiat is fluctuating around 10/15% and the BTC is 10x ?? Not sure I agree with your assessment
IF there is a correlation between liquidity peaks and halvings, the question is whether there could be a causal relationship, and if so, in which direction.
Liquidity affecting halving is not possible, as the halving schedule was effectively set out with the initial bitcoin code (2010).
A causal relationship in the other direction would be surreal and mind-blowing...
The most likely is just coincidence.
The Bitcoin halving is a fundamental process that transforms Bitcoin into a finite supply asset.
Guess we'll never know if the halving pumps the price, or people-buying-because-they-think-the halving-will-pump-the-price pumps the price,
or if it's just people speculating on people thinking the halving will punp the price.
Keep calm and hodl on ☺️
log vs linear ?
Bitcoin is retarded and uninformative in linear format. It’s an emerging tech.
I shouldn't have ideas in public before I've had caffeine. Thanks for correcting me.
Have you ever run or seen any bitcoin charts using a log format time axis?
💯🎯
New local lows possible if BTC doesn't respond as some folks expect from the halving. Way too much reliance on chart and price for btc happiness.
Sector narratives rarely make up for macro shit storms. Doesn't change the ultimate outcome nor delay it.
so simple, so rational
View quoted note →
Global liquidity:
Of course, I think both are important. Supply halvings and the HODL wave represent the supply side and how many coins are available or tightly held. Liquidity is the main driver of new, external demand, and it makes sense that bitcoin's price is highly correlated with the global money supply. And then of course there are other variables as well, including overall UX/accessibility of the network for more and more types of capital to easily come in and to *want* to come in.
It's a mistake to assume for sure that any one variable drives markets, like the universe owes you a bull market just because the halving happens. Although like prior times, my assumption is that we'll have another positive liquidity cycle after the halving, and so the debate will likely live on for another epoch.
