Most won’t appreciate this until it’s too late.
0.84 and 450. Take note of these numbers.
In about 18 days, Bitcoin’s network will slash the block rewards offered to miners to 3.125.
It still sounds like a lot, considering BTC’s hovering around the $70K mark at the time of writing. However, to put this into perspective, in its early years (2009–12), this was 50 BTC, 16x higher than the post-halving amount, at a time when you could still mine BTC on a CPU or GPU vs an energy-intensive ASIC miner.
Cool story; who cares?
You should care, especially if you want to profit from this market.
The TL;DR is that it immediately doubles the supply-and-demand ratio (assuming the latter remains constant) and generally leads to Bitcoin’s price comfortably doubling its previous all-time high (ATH).
Based on the last two major cycles, it is at least triple the previous ATH — $20K in 2017 and ~$69K in 2021.
This time, Bitcoin has done something unique: It set a new ATH before an upcoming halving event, reaching $73K.
Other factors that symbolise a different bull market from previous ones — notably the vast presence of institutional investors and the growing AI narrative in this space — are ones I outlined in a piece I wrote last month.
https://medium.com/@cryptowithlorenzo/whats-different-about-this-bitcoin-crypto-bull-cycle-ed786494c421
The numbers don’t lie
Let’s go back to the figures provided in the first line.
From 18 April, BTC’s inflation rate will drop from 1.68% to 0.84% p.a. This is lower than almost every other country, many of which have struggled to keep this figure below two per cent.
What about 450? This represents the (meagre) number of Bitcoins created daily…for over EIGHT billion people.
Institutions have been accumulating BTC for years and have really picked up the pace since early January 2023, when it began its major ascent from a low of about $15K, which now seems like a distant memory considering its impressive comeback.
BlackRock, Fidelity (let alone other Spot ETF providers), MicroStrategy, Block, Inc. — headed by Jack Dorsey, who personally owns thousands of Bitcoins — and other major investors are keen to get their hands on as many coins as possible…with the current issuance rate of 900 BTC per day.
Imagine all this enthusiasm on top of even more people entering the market wanting a piece of the pie with half as many BTC minted daily.
On top of this, about two-thirds of BTC haven’t moved in over a year, and this number has been trending upwards over time.
If you were unaware, the inflation rate will keep halving every 210,000 blocks (roughly every four years) until it hits zero (by around 2140), as programmed by Satoshi Nakamoto.
The brutal reality is that half of the world will be lucky to own 10,000 sats (i.e., 0.0001 BTC). For the rest of us, particularly those just entering the market, 0.25 BTC is starting to look ambitious but worth aspiring to.
Most Bitcoin/crypto influencers have mentioned this scarcity over the years, with TMI / Money Rules having said this at least 800 times on YouTube, so don’t say you weren’t warned.
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at Shutterstock
A futile endeavour
The sceptics and haters steadfastly believe this is all useless and the party will end sooner than we think, whether it’s a matter of the Greater Fool Theory, the renaissance of gold and other precious metals* (Peter Schiff, eat your heart out) of quantum-computing threats to Bitcoin’s network.
Two weeks ago, one user ridiculed the idea of Bitcoin, let alone any crypto asset, using cryptography (i.e., all of them, hence the name) as it “will be broken sooner or later by quantum computing”.
If hackers manage to break Bitcoin’s blockchain, we’ll have even bigger problems: stolen bank accounts, medical records, and other sensitive data.
This is just one blockchain; I highly doubt other major networks such as Ethereum, XRP Ledger, Cardano and BNB Chain will be dismantled by QC or even a 51% attack. Devs for these respective chains will incorporate quantum-resistant features or hard fork it to a newer chain that can withstand such attacks.
For them, Bitcoin is dead; you just don’t know it yet. Meanwhile, for us enthusiasts, we’re still waiting…
*A quick side note: Jokes aside, I believe precious metals will do moderately well moving forward and remain a safer bet than fiat, particularly for those holding vast amounts in a (“high-yield”) savings account. However, I’d still prioritise blue-chip tech stocks and dabble in Bitcoin and crypto over precious metals.
Additional thoughts
Putting everything (or even most of one’s net worth) into BTC is reckless, especially without market experience and an exit strategy. However, not having skin in the game is just as ridiculous, particularly with its reputation as the best-performing asset class for eight of the past 11 years.
Blackrock is putting out charts showing Bitcoin is the best performing asset in the last decade pic.twitter.com/z7pORcY0j1
— gaut is doing nothing (@0xgaut) January 11, 2024
The three terrible years for BTC were 2014, 2018 and 2022. Notice the pattern?
Moreover, two of its best years were in 2013 and 2017, with 2020 also generating solid returns.
There’s no guarantee that the foundation crypto (let alone any asset) will emulate its price cycle in the coming years. Still, many people are banking on history rhyming to establish entry and exit points for maximum profits.
Let’s not forget about the potential gains for Ethereum and altcoins going into this bull market, notably post-halving…unless you’re a Bitcoin maxi.
When do you think Bitcoin, let alone the broader crypto market, will hit its peak this cycle? How high can BTC get? I look forward to your thoughts.
Disclaimers
• N.B. None of this is financial advice; I am not a financial advisor. You are ultimately responsible for crypto investments, let alone in any asset class.
• The opinions expressed within this piece are my own and might not reflect those behind any news outlet, person, organisation, or otherwise listed here.
• Please do your research before investing in any crypto assets, staking, NFTs or other products affiliated with this space.
• For transparency, Bitcoin (BTC) accounts for approximately 22% of my crypto portfolio.
Further reading and additional resources
– Official Bitcoin Block Reward Halving Countdown
https://medium.com/p/12a29aa03979
Ways to support my work
Check out this post for various affiliate links and promotions you can use to top up (or kick start) your crypto portfolio. By using these, I earn a small commission at no extra cost.
All of my articles (including previous ones) are now published on Medium for anyone to read, including non-members. I welcome any crypto donations to support my work. Please use the following addresses to do so.
BTC — bc1qny59y95g4narcf4a7d3k9g7h54kc8jakj9t87a
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ADA —
addr1q9dkkzs8sfevxve72ttmtgthsdcddut86ssttlhn25t9qczmdv9q0qnjcvenu5khkksh0qms6mck04pqkhl0x4gk2psq5c5gqz
XRP — rLDThKVeMCZQCZcT4uzBU6NTSPHxwmRifE
DOT — 15Gn8DZeZY3pmLczjwx7WGUc7TXXme8y2nrxuC6o4hBxn7jX
Featured Image by maxtrks28 at Shutterstock.