After more 10 days ..Should I get optimistic or pessimistic about the Halving?

Hi Project.hop community,
I know that you have been saturated of reading articles on the last Bitcoin Halving as many analysts , experts and maybe newbies whipped up a frenzy of estimations about the "holy" Halving in the recent days.
I have been reading many articles on the Halving. However I haven't met a complete one yet !!
Unfortunately, each post I read or video I watched showed a single point of view or biased to another. Some expect that we are shooting for the moon so Buy buy buy..., while others are certain that it is a non-event and disappointing Halving and concerned of a rapidly price declining.

While this natural as everyone is free to express their opinion but at the same time it is important to be realistic and balanced in order not to fall prey to greed or panic.
In this article, I will to cover the Halving event in all its aspects,it might be a bit long but believe me it is interesting and worth 10 minutes of your time.
So, without any further ado, let's begin,

What is Halving?

In a nutshell, transactions within Bitcoin network are executed by "miners" , in order to do so, they utilize brute force computing with specialized mining hardware. In return, they receive "Block Rewards" which is an amount of Bitcoin automatically be added to their wallets.
After a period of time (roughly 4 years) this amount will be cut in half which makes Bitcoin mining more expensive and difficult.
In the simplest terms: Halving makes Bitcoin more scarce and hard to acquire .
This is the crux "the Halving event" .

Bitcoin has undergone three halving events through its history.

  • The first was in November 2012 when the block reward was slashed from 50 Bitcoin per block to only 25 Bitcoin
  • The second was in July 2016 which reduced the block reward to 12.5 Bitcoin
  • And finally the third occurred several days ago on May-11-2020 which reduced the block reward by half again to 6.25 Bitcoin.

Why should I care about the Halving?

I know that the vast majority of Bitcoin users and traders are NOT "miners", so that begs the question What all the hype about Halving? and Why should I care about it?
Well, from a financial perspective, Bitcoin Halving can be considered as a sort of inflation of Bitcoin.
Before the halving, there were about 1800 newly BTC added to the circulating every day. This number has been shrunk to only 900 so, logically, this operation is supposed to make Bitcoin scarcer and and therefore hypothetically more valuable.

What about the past two Halvings?

First of all, I want you to be aware that learning about the history does NOT guarantee what may happen in the future. Hewever, this also doesn't take away the fact that the past and the future often rhyme...

Having looked at the past Halvings you can see that there are things push you to get excited but cautiously

  • In the first halving on November-28th-2012: a year after the halving a massive bull run happened with the price increasing from just above $12 to nearly $1,200. This is almost 100x return during just 368 days !!
  • In the second Halving on July-16th-2016: After the halving there was another bull run market but this time it took a longer time to take place (525 days) with the price increasing from $650 at the halving date to more than $19000 a the end of bull cycle. This is almost 29x return. So,you see that the return had been cut by roughly a third.
    • In the third Halving: No one knows how far Bitcoin will reach or when. However, some analysts expect that the return multiple will be cut by a third again from 29x to about 10x .
      So if we were at about $9000 at the halving date, then it wouldn't be outrageous if we hit $90000 at the end of the supposed upcoming bull run cycle. Of course you should take all these numbers with a grain of salt as nothing is certain in the crypto world especially when it comes to price predictions .

Another noteworthy thing, if we compare between the past two Halvings, we can clearly notice what so called "extended cycles"
If we identify the cycles that appear after the previous two halvings(the blue rectangles), you will see that first is thin and tall which means that the rise occurred very fast and soared sharply.
The second one is wider and shorter which means that the rise occurred slower, and smoother than the previous one.
As market matures, I thing these cycles will continue to expand.
Why something like that happens after halvings?
Well, this is mostly because miners who spent their hard-eared cash on electricity bills to produce Bitcoins want to receive their rewards in fiat, especially after their Bitcoin rewards have been cut in half, so they start to sell their Bitcoin old stocks creating a sort of sell-side pressure. Depending on supply and demand the price of Bitcoin will continue to swing until miners' old stocks of Bitcoin run out. And then it's the time for another bull run wave.
How long it will take? no one knows. However, according to the past Halvings, I thing it is logical to say that it is somewhere between 2 to 4 years after the Halving date .
So, it is unlikely to see "bull waves" as quickly as the ones we saw in 2013 or 2017...

All in all, given that we have only two Halvings in the past , we don't have enough data to determine which direction Bitcoin price will exactly go. However we can observe that every time we've entered a having, a bull run has been right around the corner...

What does "stock to flow model" say?

Another thing I want to cover in my article is the "stock to flow" model . Before I dive in, let me tell you that Bitcoin price has followed the stock to flow model with %99.6 accuracy since its existence!!get excited?!
Without getting bogged down in the details:
It is a mechanism for calculating the existence of a commodity and the amount of its annual production in an attempt to estimate its future price
"Stock" is the amount of a commodity in existence.

"Flow" is the amount of the commodity being produced per year.
For any product the stock is divided by the flow to calculate "the stock to flow ratio" , and the higher stock to flow ratio, the more scarce this product is.
For example, gold's stock to flow ratio is 62 and this simply means that it would take 62 years of gold production at current annual production rates to reproduce the entire current supply of gold in the world. This is one of reasons that gold has an increasing value over the years and considered the most "safe haven" in the world.
For Bitcoin, according to CoinMarketCap there are about 18,382,106 BTC in Circulating now, and after the halving, there will roughly be 328500 newly BTC produced per year, so Bitcoin's stock to flow ratio is 55.95 which is really close to gold's.
The interesting thing about "stock to flow" model with a commodity like Bitcoin is that we know how much Bitcoin will be produced so,we can exactly calculate the stock to flow ratio in the future something we cannot do with pretty much any other commodity.
And the more interesting thing is that Bitcoin has an increasing stock to flow ratio over years.After each Halving, Bitcoin's stock to flow ratio will dramatically increase, this simply means Bitcoin is scarce and going to be scarcer in the future.


As you can see, Bitcoin's stock to flow ratio is currently very close to gold's, and will exceed it in 2024 or 2025 !!
I have to admit that the comparison between Bitcoin and gold is somewhat misleading as the two assets is far so different from each other. Gold has intrinsic material value while Bitcoin derives all its importance from people's confidence in it. However, this confidence has pushed Bitcoin up to the level in which it has been described as "digital gold."
If we want to believe the stock to flow model, then Bitcoin prices could hit around $94000 in May 2021 !
You may be thinking that this number is exaggerated and that the reduction in Bitcoin inflation is not going to have that big an impact. However, you might change your mind if you remember that there are only about 18 million of Bitcoin in the world and according to Credit Suisse Global Wealth Report for 2019 which claims that there are around 47 million millionaires in the world.
If you take a step back and think about it, you will find that literally all the world's millionaires couldn't all own a Bitcoin even if they wanted to!!
If you believe that Bitcoin adoption will continue to grow and spread in the next years then this Halving event certainly means a lot for you.

Some thing special with this last Halving...

Comments 23

As a follower of @followforupvotes this post has been randomly selected and upvoted! Enjoy your upvote and have a great day!

23.05.2020 20:32

Solid read.
Resteemed already. Upvote on the way :)

24.05.2020 07:50

Thank you for supporting :)

25.05.2020 20:43

Dear @qsyal

Welcome back buddy :)

One of those posts, which surely are worth checking out and reading through. Thanks for solid read.

I think it's easy to assume that since miners will be rewarded less, then selling pressure will be reduced. It itself doesn't obviously create extra demand.
However since for past few months BTC was moving within same price range then removing part of selling pressure should be reduced.

In a short time, halving probably was already priced-in. Most likely hype brought even more short term optimism, which never last long. Hype is just hype. I like to think of demand , supply and inflation and those are pointing out that BTC will get stronger within next months.

After a period of time (roughly 4 years) this amount will be cut in half which makes Bitcoin mining more expensive and difficult.

Now I've 2 questions:

don't you think that Halving is the reason why Bitcoin will be moving towards centralization? And all those dreams of decentralized financial world will be gone - sooner or later?

I can forsee that within next one or two halvings - only few corporations backed up with external funding will be able to play role of miners.

Would you agree with that statement:
We will most likely also witness change of miners business model. Instead of earning from trading mined BTC (the way it is today) and covering expesnes with that revenue.
In the nearest future most miners will not be profitable, but those corporations will be funding their operations in many different ways (just like netflix, testla and many other corpos do).

ps. try to use enter more often. it's very hard to read huge blocks of text.

Upvoted already :)
Yours, Piotr

24.05.2020 08:57

Dear @crypto.piotr
First of all, I'd like thank you for reading and supporting.
Project.hop community is the best under your hard-working leadership...

1.)For the first note:
I totally agree with you ... I think that with the passage of time, strong hands in developed countries are only those who will oversee the Bitcoin mining process. Countries like America, China and Japan are the ones who will take the lion's share ... As for decentralization, it will soon go out of the window.
Even so, I grudgingly say that this is better than the dominance of the fiat dollar, which is controlled by only one country.

2.) for the second note:
I also completely agree with what you've mentioned but let me add one thing:
For many reasons, I believe that fiat currencies have entered the aging stage, and that governments are beginning to realize this.
So, at some point in the future, I think some governments will contribute to fund companies that mine Bitcoin in order to have control over the Bitcoin mining process. I know that most governments are ostensibly fighting Bitcoin , but I believe they will have to adopt it at the end of the day ... "How long that will take?" this is the one million dollar question...

I really appreciate your Upvote ;)

24.05.2020 14:37

Dear @qsyal

I'm glad to see that you're responsive so far :) Hopefully you will stick around.

Yours, Piotr

25.05.2020 12:39

@qsyal as per my thinking bitcoin is preparing for the new breakout for new high. I this soon it will break the 10k line and reach to the new high.

Apart from that this halving created 30% miners to closed down their units as they are not making profits ,

This is good also and bad also as everything is has two parts.

So just hold tight and weight for the breakout.

24.05.2020 13:35

I agree with you...No matter how long we wait, I think Bitcoin will eventually raise
Thank you for your comment :)

26.05.2020 08:33

I see that halving bitcoin will make bitcoin price will increase, I just wait when the btc increase will drag all cryptocurrency market. That is a good news for other coins holders.

24.05.2020 15:20

You're right but be careful with selecting altcoins as the vast majority of them are just pointless

25.05.2020 21:18

Hi @qsyal
Thank @crypto.piotr because you invited me to this post.

I have been reading many articles on the Halving. However I haven't met a complete one yet !!

It turns out that there is a secret message embedded in block 629,999, one block ahead of the Halving block (630,000). The message reminds the public of hidden messages in the first block ( genesis block ), the 0th block of Bitcoin on January 3, 2009 ago.

The message pinned in block 629,999 was: "NYTimes 09 / Apr / 2020 With $ 2.3T Injection, Fed's Plan Far Exceeds 2008 Rescue" . The message refers to news in The New York Times on April 9, 2020, about the plan to roll out additional funds by the Fed (Central Bank of the United States) to save the economy, the amount of which exceeded the crisis of 2008.

The message reminded the public of the message in *Genesis Block in 2009 ago . At that time the message pinned by the creator of Bitcoin, Satoshi Nakamoto was: "The Times 03 / Jan / 2009 Chancellor on brink of the second bailout for banks" .

In other words, "from 12 May 2020 to the next 210,000 blocks (equivalent to 4 years), the number of Bitcoin is increasingly scarce, from 1800 BTC per day to only 900 BTC per day."

24.05.2020 16:11

The Halving of course is a historical event in Bitcoin and technology world. Bitcoin it self is a historical event for the world of money. I like your article because it covers a different points of view and form to take this event.

I think that people and investors they have to let it happend, i'm a trader and the price in the market, the sentiment of money, is a process, a process thats take a time to develop and need the force of profesional money. I mean that a Halving is only a event programed in code of the bitcoin blockchain. But the speculation about that is the real problem, you need to take care about that. Is true that the past halving make grow up the price of bitcoin, and i'm think this halving take the same effect, but you need to wait for buy, you don't make positions for the opinions about the other, or best analyst's, you need to know when is the exactly moment for buy in the market.

Thanks for open this discussion ! Keep goin and welcome to Project.Hope!

24.05.2020 22:51

Certainly, my article is just a long-term personal view of Bitcoin's history and future
It is not an analysis or financial advice at all
Determining the places of sale and purchase is the prerogative of professional analysts (not me)
I appreciate your comment ..Thanks

25.05.2020 20:41

Hi, you got all the valid points in your article. As I still think the 4-year cycles are going to repeat, it might not be that drastically over and over with time as you mentioned with the adoption, etc. But we still have a few "big" bull runs ahead of us I suppose.

I am just going through this video about prolonging cycles, I am right in the middle at this moment so I have no idea if its valid or not (or probable let's say), but you can check it out as well -

25.05.2020 06:21

hi again @qsyal

I've shared your post with few guys from our community. hope you will find time to reply to their comments :)

25.05.2020 09:01

I'd like to thank you again for continuous support
I will definitely keep sticking around to reply comments :)

25.05.2020 21:02

Dear @qsyal
I read your article.
First of all, thank you for your simple and good article. 👏

Halving is an event in this field that is quite useful for this industry.

But I want to tell you an interesting story.
I don't remember where I read this, but it's a useful fact.

Whenever a new industry is formed, 3 groups of people come to this industry.

- The first group are those who take risks and start investing in that industry.
- The second group are those who enter the industry after a while and start working.
- And the last group are those who enter the industry after it is pervasive and no longer benefit from it.


I will explain with an example.
Suppose the Internet industry.
The first group were those who took risks and invested in the Internet. Like ISP companies.
Companies like ISP , make the most profit because they were the first.

The second group are those who came to it after getting acquainted with the Internet and started working in that field.
These people do not make a profit like the first group, but they have the opportunity to make a profit in this industry. Such as creating large store sites and ...

And finally, the third group enters the industry when it has become pervasive and part of everyday life.

They have to connect to the Internet because some classes are online or some government work is online, and they have to enter the industry to continue their lives.

This is what I am saying.
Bitcoin is currently in the second stage, and we are the second group because one in 100 people has heard of Bitcoin.

So progress can still be made, and the third group of people will accept #Bitcoin when most online shopping is done with Bitcoin.

25.05.2020 09:46

You've expressed what I was thinking in a beautiful way :)
However, I think that there are some altcoins that are still in the first stage .. So I prefer to put part of my investment in it

25.05.2020 20:28

Hello friend @qsyal, I have read your publication very carefully, and I will be very sincere with you, I think that I cannot give any opinion, since it is too soon to do so.
But despite that I think it would be a very good exercise to see the behavior in the previous years when the Halving were made.

That behavior may be some indication of how the behavior may be from now on. But I keep insisting that 10 days is a very short time.

25.05.2020 21:12

Dear @lanzjoseg
Of course you are right, t is too soon to expect the direction
I'm just trying to highlight some important and special points about this event as well as making a comparison between this Halving against the last episodes

learning about the history does NOT guarantee what may happen in the future. Hewever, this also doesn't take away the fact that the past and the future often rhyme...

I really appreciate your feedback ...thank you very much

25.05.2020 21:35

Hi @qsyal

This is an interesting post on halving and this event is something I have been watching closely too for some time. Especially since I have watched my portfolio go through the previous halving event.

It is very difficult to say what will happen but I do believe there is a natural upwards pressure on price. As you said, the miners like to catch in their mined Bitcoin and this flows into the exchanges and meets some buyer demand. With less supply, economics tells us that the price will rise.

It wasn't ever going to happen overnight though and will take some time for the reduced supply to filter through and have a price impact.

I think previously though the bull market was backed up with a lot of hype. This kicked in FOMO to the extent that every taxi driver was talking about buying Bitcoin. I remember one of my relatives who had no idea what Bitcoin was, asked me if she bought $100 worth, would she be able to pay off her mortgage in a few years.

I think now, FOMO will take time to kick in because many people got burnt before. In my opinion that may be a good thing as I would prefer prices rises to be because people actually want Bitcoin for what it is rather than people just buying it for idiotic FOMO reasons.

So in conclusion, my view is that we are likely to see upwards price pressure in the coming weeks but not as big as previous spikes.

25.05.2020 21:31

@qsyal it's really nice learning from you about your opinion on Bitcoin halving and I must say you've actually explained the process involved in the halving and it's really lovely you backed up your words or claims with great evidence such as the Bitcoin curve or graph you shared showing the period which the halving occurred and it's impact on Bitcoin.

Before the halving, there were about 1800 newly BTC added to the circulating every day. This number has been shrunk to only 900 so, logically, this operation is supposed to make Bitcoin scarcer and and therefore hypothetically more valuable.

You are actually right about this. There is actually no doubt that the halving process will surely make Bitcoin scarce and this will allow the law of demand and supply of a commodity to set in and this automatically boosts the price or worth of Bitcoin.

Even for high-profile companies, many of them started to seriously think to accept Bitcoin and others are trying to mimic the success of Bitcoin by creating their own cryptocurrency, the most prominent example is Facebook with its upcoming cryptocurrency "Libra".

This kind of practice is now very common amongst most companies. There are even some applications that also accept Bitcoin as their payment method on Google playstore.

As for the case of Facebook, I also heard Mark saying he's gonna lunch crypto coin for Facebook after partnering with libra. I was actually thinking it would have been more lovely if he had partnered with Bitcoin blockchain but I guess he has his personal reason for his decision though.

However, even though Bitcoin has proved itself as a safe haven no less than gold.

This is actually one of the reasons BTC will continue to remain the best digital asset one can ever invest in.

Thanks for sharing this great post with love from @hardaeborla in courtesy of @crypto.piotr and I hope you have a great day ahead ❤️💕❤️💕❤️💕❤️💕❤️

26.05.2020 12:29

@tipu curate

26.05.2020 21:16