Will the halving drive Bitcoin prices higher?

Another halving is coming. At this point, most people know what happened — Bitcoin’s ongoing monetary inflation rate was cut in half. This ratio will remain at the new level of around 0.9% for approximately the next 4 years, when it will be halved again.

The halving does affect price

but it may not have an impact in the most obvious way it may seem—at least not immediately. Our view is that halving affects price in two ways, one slowly and continuously, the other immediately and temporarily:

1. This is the "obvious" way - it Reduce the ongoing supply rate by half, thereby alleviating structural selling pressure on miners. It's just that this effect is not immediate, but will have an impact over time
2. But the more direct fact is that each halving is actually A huge marketing campaign. This brought an immediate renewed focus on Bitcoin, injecting adrenaline into the market, but it quickly faded thereafter. “The impact is its impact on supply shocks. Overnight, the supply was cut in half, reducing Bitcoin’s monetary inflation rate by 50%. However, this is not as impactful in the short term as one might think. Most of its magic works over time.

As a thought experiment, let’s consider the size of Bitcoin issuance relative to current ETF flows from the United States. At current prices, the ETF consumes approximately 9,000 Bitcoin per day. The mining network produces approximately 900 coins per day. This means that even if miners sell all the coins they mine every day, ETF traffic will still consume 10 times that amount.

It will be 20 times after halving. But that doesn't change the fact that the only way

ETFs can acquire so many tokens is through upward repricing, causing existing holders to add dormant tokens back to the market

.

But that doesn’t mean there is no effect. Let's imagine the price is 10 times higher than here. At this level, the same ETF flow would only consume 900 tokens per day, fully balancing the ongoing supply. At this price level, the impact of the halving would be immediately greater.

In the long run, if traffic is constant, halving can actually maintain the price level at higher and higher levels, or if traffic decreases at the same rate as the issuance, the price level can maintained at a similar level. This is definitely an important impact, but in the short term it's completely drowned in speculation and there's no point in looking for any immediate impact.

Half Halving as a Marketing Campaign

This is where the effects are immediately felt. Every time a halving approaches, the media reports it with undying fascination, giving Bitcoin a fresh look in traditional media. At this point, people who first heard about Bitcoin during the last bull market but thought it was dead will find out that it's actually pretty good and often performs much better than they thought. That’s certainly the case this time around, with prices approaching all-time highs, even before the halving.

# (The content of this article is for reference only and does not serve as investment advice. Strictly limit profits and losses, operate steadily, and be safe in your pocket)

The above is the detailed content of Will the halving drive Bitcoin prices higher?. For more information, please follow other related articles on the PHP Chinese website!