Analysis: The 2020 Bitcoin Halving Is Already Priced In

One of the most anticipated events in 2020 is coming close. Bitcoin’s halving, that will slash the reward miners get for adding new blocks to the network, is about 4 months away. Given that it would likely decrease the demand of freshly minted bitcoins to the market, a lot of people think it would have a positive impact on the Bitcoin price. A prominent analyst, however, thinks that it might already be priced in.

Bitcoin Halving Priced In Correctly

There is a serious and continuous debate going on within the cryptocurrency community regarding Bitcoin’s halving and the impact it would have on the price. As Cryptopotato reported, the halving has so far had a historically positive effect on the price. In both years following the previous halvings, the price increased substantially.

While history isn’t an indicator of future happenings, a lot of people seem to believe that this time will be no different. The main argument here is that the supply of bitcoins will be reduced and if the demand for them remains the same or increases, the price should go up.

However, some seem to consider that it’s already priced in. Popular cryptocurrency PlanB who is oftentimes talking about Bitcoin’s stock-to-flow model argued that the pricing is already priced in “correctly.”

According to him, 10% of people know about the model, while 90% don’t understand the math behind it. He also said that the demand is missing.

#Bitcoin halving .. 4 months to go ?

IMO halving is priced in correctly and markets are efficient, in the sense that few people (10%) know, understand and believe S2F model, and most people (90%) don’t know S2F, don’t understand stats&math behind it, think demand is missing etc pic.twitter.com/Z9nBPmRBvK

— PlanB [Jan/3➞?] (@100trillionUSD) January 1, 2020

He’s definitely not the only one. More recently, Meltem Demirors, a very vocal and popular proponent and CSO at CoinShares, said that the halving might not trigger a bull run because most of the market is driven by derivatives trading rather than actual bitcoins. Hence, the supply and demand dynamics don’t kick in.

Could This Be True?

When an event of any kind is highly anticipated and the majority of traders know that it may have an impact on the price, they trade accordingly. Hence, this is why some consider Bitcoin’s halving to be already priced in – because the information is public and people can make plans accordingly.

However, it’s also worth noting that the event will truly decrease the number of bitcoins that enter the market. Even though what Meltem Demirors is true and Bitcoin futures trading makes up for a large part of the overall traded volume, the demand is considerable.

This is probably the main reason for which a lot of people believe that Bitcoin’s price will go up in the year after the halving.

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