9th July 2023 > > The halving.

tl;dr

Ignore the hype, the next halving is not what it is cracked up to be. There are many reasons to be bullish about the future price of BTC, but this is not one of them.

Market Snap

Market Wrap

Back in the old mid 30’s trading range the techies have no data on which they can make incorrect price forecasts.

Occasional Series – ManxMan/Tour de France/One of our greatest athletes

We love you.

Occasional Series – British Library

The British Library closed to celebrate its 50th birthday.

What?

I mean, what?

Hard on the heels of the NHS celebrating its own 75th birthday, am I the only person to know that these are not actually living things? Will someone out there please tell me I am not the one who is insane.

Or am I John Watson, living Outside of the Asylum? (*)

Curious Cryptos’ Commentary – BTC halving

Each time a block is added to the chain the successful miner receives fees from each transaction in that block plus the mining reward. At first mining rewards were 50 BTC per block (and could be gained using a simple PC or less which is a touch annoying now) but approximately every four years that reward is cut in half. So, in 2012 the reward was reduced to 25. In 2016 it was reduced to 12.5. In 2020 it was reduced to 6.25. In early May 2024 it will be 3.125.

You are going to hear a lot more about this event as we get closer to it, and this is the reason why:

Note the log scale to the left.

The theory behind price rises around the halving is simple economics 1.0 – less supply in the face of constant or increased demand results in one very predictable outcome.

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Not one to normally reject a positive spin for cryptos and the pricing of cryptos, I must admit I think this narrative is beginning to wear thin.

BTC’s destiny is that only 21mm coins will ever be created. Fractionalised reserve banking it aint, which is one of the myriad reasons why cryptos will coexist alongside fiat, rather than replace fiat, for that latter outcome would stop technological progress fuelled by investment.

Approximately 18.5mm coins have been mined, 88% of the total. The last BTC to be mined is predicted to happen in 2140. Regardless of the daily advances in medical science, I suspect that date is largely irrelevant to those of us who are middle-aged, though perhaps not our grown-up children.

The reduction in supply due to each halving becomes ever less material. The remaining 2.5mm coins is less than most estimates of what has been lost. Glassnode believes it to be 2mm, but some estimates are as high as 4mm. 1mm of those are to be found in Satoshi Nakamoto’s wallets as mining rewards while he waited for the world to catch up with his glorious vision of taking back (some) control from the financial elite. We can be confident that these have been deliberately burnt.

The NY Times (not known for a crypto-friendly approach for obvious reasons) ran an article in 2021 about people who had lost BTC:

https://www.nytimes.com/2021/01/12/technology/bitcoin-passwords-wallets-fortunes.html

James Howell threw 8,000 BTC into the bin:

https://www.youtube.com/watch?v=cZr97E5PgzQ&t=6s

It’s a heartbreaking, and in some respects a heart-warming, story.

But that isn’t the point.

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Previous halvings have had a material impact on the supply of BTC.

But not this one.

BTC will appreciate in price for many reasons, but ignore this tired, worn-out, and ultimately futile narrative around the next halving.

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(*) “Hold stick near centre of its length. Moisten pointed end in mouth. Insert in tooth space, blunt end next to gum. Use gentle in-out motion”

The toothpick instructions that convinced Wonko that mankind was crazy”.

If you are unfamiliar with the reference to Wonko the Sane, why are you reading my daily missive?