I had a private conversation with Kadan Stadelmann, the CTO of Komodo, a non-custodial wallet and atomic swap decentralized exchange platform. We explored the potential effects of the upcoming Bitcoin halving on Bitcoin and the entire cryptocurrency sector during this chat.
The Bitcoin halving is approaching soon, and there’s great anticipation surrounding this significant event for Bitcoin. This crucial moment will result in a reduction by half of the rewards given for mining new blocks, thereby impacting the amount of Bitcoin in circulation.
There’s ongoing debate among investors and market analysts regarding the potential effect of recent events on Bitcoin’s future direction. While some argue that Bitcoin will likely adhere to past patterns, others hold the view that this market phase is unique.
Kadan Stadelmann, who has headed Komodo since 2016, offered some perspectives on potential developments in Bitcoin’s future.
What are your thoughts on this Bitcoin halving? Do you think the halving will drive public interest in crypto?
A Bitcoin halving signifies significance as it decreases the newly mined Bitcoins per block, causing a supply shortage. Preceding bull market cycles have been initiated by Bitcoin halvings, instilling enthusiasm among crypto enthusiasts. Consequently, the increased prices draw attention from mainstream media, igniting greater curiosity and investment from both individual and institutional investors.
What about the risks? Will the halving impact the number of miners since the costs per token will double? What effect would that have, if any?
It’s plausible that the 2024 Bitcoin halving or subsequent halvings may decrease miner profits, causing a reduction in the number of miners. Yet, if the value of a Bitcoin keeps climbing, it could help mitigate some of these losses. Moreover, we can expect larger corporations to enter Bitcoin mining on a bigger scale.
Institutional interest is widely believed to fuel the anticipated stock market surge in 2024. Is this demand substantial enough to trigger a significant supply shortage?
There is sufficient institutional interest pushing for an increase in Bitcoin’s supply. On the demand side, the surge in investments in Bitcoin ETFs has been extraordinary. In only seven weeks, inflows matched what took gold ETFs three years to accumulate. Additionally, MicroStrategy’s Bitcoin acquisitions continue, with a recent purchase of 12,000 BTC for $821.7 million and plans to buy more using an additional $500 million. On the supply side, April’s Bitcoin halving will decrease the newly issued supply by half. These occurrences collectively generate a strong sense of fear of missing out (FOMO) among investors.
Do you mean the demand is already priced, or is it yet to kick in?
In the initial phase of the present market trend, it seems that retail interest is trailing institutional investment. Nevertheless, a significant portion of retail demand for this cycle might be fulfilled through Bitcoin Spot ETFs. This implies that there could be a group of novice crypto investors who have opted to buy Bitcoin indirectly via ETFs instead of using cryptocurrency exchanges.
And do you think the halving will inspire confidence among retail investors?
In simpler terms, the Bitcoin halving generally boosts investor trust for several reasons. Initially, it serves as an alternative to fiat currency. The investors are aware that Bitcoin is progressively becoming less inflationary every four years, while fiat currency tends to become more so, as shown by recent disappointing US economic data (CPI and PPI). Additionally, the success of Bitcoin typically causes the entire crypto market to surge in value post-halving, resulting in increased media attention for numerous other cryptocurrencies.
In the past, it’s been observed that the prices of altcoins often mirror Bitcoin’s trends. Which altcoin do you think might experience a price boost as a result of Bitcoin’s upcoming halving event?
Identifying the cryptocurrency that will gain the most from Bitcoin’s halving in 2024 is not an easy task. Instead, it’s more reasonable to expect that many cryptocurrencies will increase in value during the latter half of 2024 and into early 2025. When making a choice on which cryptocurrency to invest in, it’s essential to focus on its long-term worth by examining aspects like token economics, technology, and use cases. These factors can provide value beyond crypto market fluctuations.
“Moving on to the question everyone’s been asking, what do you think will be the price of Bitcoin following its halving? Let’s consider a time frame of three or six months.”
The price of Bitcoin might remain stable for three months following the halving as miners sell off their coins. But over a longer period, say six to twelve months, Bitcoin’s value is likely to rise if past trends are any indication. I believe this bull market will persist until at least 2025, and it wouldn’t shock me if it continued climbing beyond that, given the growing interest from institutions.
And what about the more immediate implications of halving the Bitcoin price?
The cost of Bitcoin prior to its halving event is prone to significant fluctuations. Current market conditions may seem pessimistic, but this has been typical preceding past halvings. However, following the halving, the market tends to surprise many with unexpected growth, despite initial expectations of stagnation or even decline.
So, are you bullish on Bitcoin?
I’m optimistic about Bitcoin’s mid-term to long-term growth potential. The increasing adoption by institutional investors and the introduction of Bitcoin ETFs could push its price to hit $100,000 by the end of this year. Following a significant Bitcoin price surge, many altcoins are expected to experience their own market upturns, either towards the end of 2022 or during early 2025.
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2024-04-19 16:10