The most recent bitcoin halving was a year ago today, on May 11, 2020 (UTC time). To commemorate this event, let’s take a look back at what has happened in the Bitcoin market over the past year and look ahead to what the future may hold.
The Importance of Halving Quantitative Tightening
During the global liquidity crisis in early March 2020, all asset classes saw record plunges and since then have ushered in unprecedented monetary and fiscal stimulus. At the time, Bitcoin was trading at around $8,000 when it was halved on May 11, 2020. Investors around the world began to realize that they needed to seek refuge and insulate themselves from the dramatic monetary expansion. In stark contrast, Bitcoin experienced a quantitative crunch – that is, a 50% cut in the supply of new Bitcoin issuance regardless of any policymaker’s choice.
What has happened since the 2020 halving
Since the halving event in 2020, investor sentiment around the impending record monetary expansion has proven to be correct. The Federal Reserve (and other major global central banks) continue to inject liquidity into the financial system to keep lending conditions accommodative, and this has played a major role in the adoption of bitcoin as an alternative monetary asset that exists outside the system.
At the time of writing, Bitcoin has risen 533% since the halving, as the supply and demand dynamics of surging demand coupled with inelastic (and 50% less) supply issuance has caused the asset to soar to over $1 trillion in market cap.
Prior to the halving event, legendary Wall Street manager Paul Tudor Jones published a report entitled “The Great Monetary Inflation” in which he outlined his beliefs about the current monetary system and its future path, and why he believes Bitcoin is the “fastest horse in the race”.
Shortly thereafter, in a watershed moment in Bitcoin’s rise to prominence, MicroStrategy, led by now-famous Bitcoin proponent Michael Saylor, announced the use of Bitcoin as its vault reserve asset.
In what has since become an increasingly accepted view, Saylor and company decided not to use the CPI as an accurate measure of inflation, but instead decided to use the M2 monetary base as a measure of inflation.
“Once the real rate of return on our vault hit negative 10 percent or more, we realized that everything we were doing in terms of profit and loss was irrelevant,” Saylor says.” We really felt like we were on a $500 million block of melting ice.”
Will the same be true for future halving?
Prior to last year’s halving, crowds in the Bitcoin community and the rest of the broader financial system debated whether the halving would be reflected in the price, as this event would be known in the future. While I won’t go into my personal views on this debate, it is extremely interesting to note that the price of Bitcoin appears to be following the S2F model first proposed by the anonymous Twitter account Plan B in March 2019 due to the nuances of the price of Bitcoin and all the exogenous variables and factors at play.
Will the same be true for future halving? Who knows? But what is known is that since the 2024 halving is only 156,872 blocks away, it might be a good idea to get ready before the next halving ……
Remember, if you’re not long bitcoin, you’re short. Finally, happy one year anniversary of the halving!
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-is-bitcoin-doing-on-the-first-anniversary-of-the-halving/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.