In brief:
- The current global economic environment is very different from past Bitcoin halving events.
- The first halving event was on November 28th, 2012; the Second was July 9, 2016; and the Third halving event is estimated to occur around 12th May 2020.
- Perhaps LTC’s performance during last year’s Litecoin halving was a warning sign that Bitcoin’s value will not go up.
A tweet by legendary commodities trader, Peter Brandt, has sparked a lot of debate regarding the upcoming Bitcoin halving event and its effects on the value of BTC. In the tweet, Mr. Brandt suggests that the event is grossly over-rated and that the real supply of BTC is equivalent to its daily trading volume. He further explains that the daily reduction in mined BTC is roughly 1% of this value. His tweet can be found below.
Bitcoin halving = #Grossly_over_rated
The daily trading volume of BTC = the REAL supply of BTC
The daily reduction of mined $BTCs (NEW supply) equals approx 2/100th of 1% of REAL supply
Reduction of NEW supply b/c of halving as % of REAL supply = chump change
— Peter Brandt (@PeterLBrandt) March 17, 2020
Several members of crypto twitter have thus responded to the tweet with a summary of their arguments being as follows:
- Mr. Brandt is right and the halving has already been priced in.
- His method of using trading volume as a measure of supply is wrong.
Why Bitcoin’s Value Might Not Be Boosted by the Halving
Whether Mr. Brandt’s analysis is right or wrong, is a debate that will probably be worthy of a research paper. What we do know is that the world as we know it is coming to terms with the Coronavirus pandemic. As a result, global economies have been hit hard with the Dow, S&P 500 and Oil dropping significantly in the past two weeks. As a result, the United States is considering bailouts as well us giving all its citizens a cash stimulus in the coming days. Governments all over the world are doing all they can to prevent a recession in their respective economies.
It is with the above global economic environment, that Bitcoin’s halving might not have the desired effect on the price of BTC. We saw in an earlier analysis, that the value of BTC might be headed to the mid or high $2,000 levels if there is a confirmed recession.
Litecoin’s Halving Last Year, Was Perhaps a Warning for Bitcoin
It is often said that Litecoin is Bitcoin’s little brother and LTC might have revealed that the effects of halving events on the value of a coin are dwindling with time. Litecoin’s last halving was on August 5th, 2019. The coin’s value peaked on 20th June 2019 at $145. This was approximately 46 days before the event.
Further checking the countdown towards Bitcoin’s halving, we find that the event is 55 days away. This, in turn, could mean that the halving has already been priced in and we are truly in a bear market.
(Feature image courtesy of Daniel Lincoln on Unsplash.)