A recent panel at the Swan Pacific Bitcoin festival was cleverly titled, “Are halving price cycles bullshit?” Throughout the discussion, host and founder of the Bitcoin Layer Nik Bhatia asked Marathon Digital CEO Fred Thiel, Swan CIO Ralph Zagury and Swan product manager Andy Edstrom to share their thoughts on whether the Bitcoin halving is truly a bullish event or just another narrative that novice investors buy into.
While the panel’s headline might be offputting for some, the inquiry is of great interest to all manner of Bitcoin (BTC) and cryptocurrency investors. The conventional belief held by many in the space is that the Bitcoin supply halving is a bullish phenomenon that when complete, is followed by near parabolic upside in BTC price.
Go and ask any Bitcoin lover about what they’re most excited about in the next year and if they don’t mention the chance for a spot Bitcoin ETF approval first, they’re probably going to say the upcoming halving event.
Previous Bitcoin halving events have coincided with bull markets ramping up.
But will the macro conditions be ripe for that next year in May?
~ If we are past the initial shock of a recession.
~ If a spot BTC ETF is approved.
~ If QE is back on the menu.Then the planets will… pic.twitter.com/g5dEEKiSMF
— ecoinometrics (@ecoinometrics) September 6, 2023
While previous performance does provide some compelling evidence for what might happen in the next halving, questioning long held assertions and price expectations for a high volatility asset like Bitcoin is probably something every investor should do more often — especially when considering the number of bearish events that have occurred in the past two years.
To start the discussion, host Nik Bhatia jumped right in by asking “if the halving is the main driver of the Bitcoin price?”
Thiel quickly responded with:
Zagury agreed, adding that “flow is really what drives the market, so the halving by definition, there’s nothing on it that should impact price.” Interestingly, Edstrom took a different position by suggesting that:
Each panelist, including host Bhatia seemed to agree that while the halving may possess some market moving capacity, it could be diminishing over time. According to Bhatia,
Halving hype and hopium is all in investors’ headsPanelists at the “Are halving price cycles bullshit?” panel. Source: Swan Bitcoin YouTube
Speculation is essentially at the root of all investing, and while Zagury and Thiel are of the mind that investors attribute more hope, than fact, to the forecast impact of the Bitcoin halving, Edstrom sees the event as the manifestation of a “psychological feedback loop coming into the demand side.”
Another popular yearslong held belief by many investors is the role derivatives play in Bitcoin’s price discovery. Bhatia asked whether derivatives played a larger role than spot trading in impacting Bitcoin’s price action and Zagury said,
According to Zagury, “a thing about Bitcoin which is super curious, and I think there isn’t any other asset class like this out there, is that most of the time, Bitcoin is moving either sideways, in terms of number of days, it’s either sideways or down.”
Bitcoin’s time spent trading in a rangebound band or in a downtrend is what Zagury says “makes it really hard to hodl, right, because it means you’re going to have months and years of pain and you’re going to have days of glory.”
Peddling back to the initial question about the role derivatives play in Bitcoin price discovery, Zagury said:
Liquidity will be the focal point
Despite discounting the impact of Bitcoin supply halvings on BTC price, each panelist expressed their positive longer-term bullish perspectives for Bitcoin’s value.
With liquidity being the agreed upon future price catalyst for Bitcoin, Zagury said:
When asked when and how this all-important liquidity comes back, Edstrom hinted that 10-year U.S. Treasuries pushing above 5%, the potential regional bank failures that mirror the ones seen 6 months ago, and the rising amount of banks holding long duration government debt at a loss, are all signs that a Federal Reserve pivot that returns to quantitative easing could occur sooner than later.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.