- The upcoming Bitcoin halving sparks debate on whether its effects are already reflected in the current price.
- Opinions are divided between supporters of the Efficient Market Theory and those who point to historical cycles.
- Scepticism increases around the halving’s impact, with some experts predicting more downside.
- Yet, others argue its deflationary nature is inherently acknowledged in Bitcoin’s fixed supply.
The crypto market had a rough week, with many assets falling by 20% and more. With Bitcoin reaching a new all-time high in March at US$73,750 (AU$115,129), it managed to stay above the US$60k (AU$93.7k) mark, despite the 10% drop.
With the Bitcoin halving coming up in less than 24 hours, just 150 blocks away, many are unsure what to make of the halving.
Related: Find out what the grand event known as halving means for Bitcoin in the comprehensive CNA guide
Halving Gets Far More Publicity Than Prior Events, Says Mizuho CEO
Mizuho Securities Managing Director Dan Dolev told Yahoo Finance that this time, things are different. The CEO is sceptical and suggested that unlike previous cycles, the current situation is influenced by higher interest rates and increased awareness of the event.
He believes that the market has already fully priced in the potential benefits of the halving, as indicated by recent price increases prior to a downturn. As a result, Dolev anticipates more downside than upside moving forward:
And I think all the upside that you saw heading into the last few weeks, pre the downturn, show you that we’re kind of already pricing it, fully pricing it in. So, I actually expect more downside than upside at this point.
Dan Dolev, Mizuho Securities Managing DirectorHalving Priced in or Not? Debate Rages on
There is ongoing debate over whether the halving (also sometimes called the halvening) – which will see daily mining rewards drop from 900 BTC to 450 BTC – is already priced in by the market.
The debate centres around two contrasting economic theories. The first is the Efficient Market Theory, which argues that the halving is already priced into Bitcoin’s current value.
Supporters of this view hold that because the halving is a well-known event and all market participants share the same information, it is impossible for Bitcoin to be currently undervalued.
The second theory focuses on historical patterns, specifically the four-year boom and bust cycles observed in the crypto market, suggesting that cyclical trends and supply-and-demand constraints can still lead to significant price changes despite widespread knowledge of the halving.
Crypto sceptics at JPMorgan and Goldman Sachs have downplayed the halving effects, arguing it won’t bring in new buyers.
This Time It’s Really Different!?
However, with institutional interest having arrived – in the form of the US Spot Bitcoin ETFs and news around similar products in Asia, particularly Hong Kong, most recently – many believe this time really is different.
Related: Bloomberg Reports Hong Kong Spot Bitcoin ETFs Likely to Exclude Mainland Chinese Investors
Austin Campbell, Columbia Business School assistant professor, told CoinDesk that the impact of the Bitcoin halving is not necessarily priced in, but rather that its influence on Bitcoin’s price is diminishing as the cryptocurrency becomes more integrated into traditional finance.
Haseeb Qureshi, Dragonfly Capital managing partner, holds an opposing view, saying:
The halving is what it means for bitcoin to be deflationary. It’s been priced in since the first time someone bought bitcoin because it has a fixed supply.
Haseeb Qureshi, Dragonfly Capital managing partnerHe also dismissed chart drawings and technical analysis as nonsense, adding:
People drawing charts and rainbows and all this nonsense over an event that has deterministically happened four times (on an asset that already goes up almost every single year) is pseudoscientific nonsense. But whatever, it’s a good story.
Haseeb Qureshi, Dragonfly Capital managing partner
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