Cryptocurrency hedge fund Pantera Capital stated in a letter to internal employees “FTX Underscores The Importance Of DeFi” that Bitcoin halving will have a huge impact on prices, and based on the Stock-To-Flow model price prediction,If history repeats itself,Then Bitcoin will rise to $36,000 before the next halving, and then to $149,000. (Recap:FTX is the last? Placeholder: Cryptocurrencies have bottomed out! 5 big data tell you) (Background Supplement:President of El Salvador: Starting tomorrow, one bitcoin will be voted every day!)
2022 has been a brutal year for cryptocurrency investors, with the recent crashes of Terra, Three Arrows Capital (3AC) and FTX wreaking havoc since mid-year. The total market value of the cryptocurrency market has lost more than 71% from the peak value of last year, and the evaporated value has exceeded 2.2 trillion US dollars.
Although most people have despaired of the future of cryptocurrencies, the cryptocurrency hedge fund Pantera Capital predicted that the halving of Bitcoin will drive BTC to soar by $149,000 in its internal employee letter “FTX Underscores The Importance Of DeFi”.
FTX event impact
First of all, in the article, Pantera mentioned the impact of the FTX crash, saying that the loss this time mainly came from the income on Blockfolio (denominated in FTT tokens and FTX stocks), and it is expected to maintain a certain degree of flexibility in transactions and reduce Positions against centralized counterparties.
We have cleared as much FTT as possible on Tuesday 8th November. Before the crash, our FTX stock and FTT token positions combined accounted for less than 3% of our firm’s total AUM.
Pantera also undeniably believes that the price of the entire encryption ecosystem will be affected by the collapse of FTX, and assets related to FTX (Solana, Aptos, and basic projects, etc.) may be hit the hardest, and regulators may make In response, Pantera emphasized that it remains cautiously optimistic about the long-term prospects of the encryption market.
Then Pantera mentioned that the next Bitcoin halving is expected to occur on April 20, 2024, and the mining reward will be reduced from 6.25 BTC per block to 3.125 BTC per block, and briefly described the importance of halving, which is different from general The monetary function of QE is quite different from QE. With a total supply of 21 million bitcoins, the supply of new coins will decrease over time.
Citing efficient market theory, Pantera said that if the demand for new (post-halving) bitcoins remains the same while the supply of new bitcoins is cut in half, this will force prices up. Before the Bitcoin halving event, there will also be an increase in demand for Bitcoin due to expectations of rising prices.
For years, we have emphasized that the halving is a big deal, but it will take years to play out.
On average, a typical bottom occurred 1.3 years before the halving, the market peaked 1.3 years after the halving, and the entire process took 2.6 years to see the full impact.
According to Pantera, if history repeats itself, the price of Bitcoin will bottom out on December 30, 2022.
We could see the rally continue until early 2024, followed by a strong rally after the actual halving.
Stock-To-Flow Model Price Prediction
In addition to speculating based on historical data, Pantera also proposes that the framework for analyzing the impact of halving is to study the changes in the “stock” and “traffic ratio” of each halving.
During the first halving, the Bitcoin supply was reduced by 17%, which had a huge impact on new supply and therefore price. But as the ratio of Bitcoin supply decreases from the previous two halvings to the next, the impact of each subsequent halving on price may gradually diminish.
Pantera presented the changes in supply and price impact during the previous two halvings through data:
During the 2016 Bitcoin halving, when the supply was halved, the drop was only a third of what it was the first time. Interestingly, it affects only a third of the price.
The 2020 halving reduced the supply of new bitcoins by 43% compared to the previous halving. Its impact on price is 23%.
So Pantera says:
If history repeats itself, Bitcoin will rise to $36,000 before the next halving and $149,000 thereafter.
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