Bitcoin’s next halving is drawing near, and investors are eagerly anticipating the potential for another significant bull market. Mitchell Askew, Head Analyst for Blockware Solutions, holds an optimistic outlook for the event. Contrary to conventional wisdom that both Bitcoin and the halving are subject to diminishing returns, Askew believes that the halving’s effect will continue to exhibit exponential strength in future cycles. This article examines Askew’s theory and explores the potential implications of the halving on Bitcoin’s future.
One of the prevailing theories regarding the halving suggests that its multiplier effect will diminish over time due to the law of diminishing returns. According to this theory, as more money is invested into an asset, investors’ profits become smaller. However, Askew challenges this notion by asserting that the BTC price is determined by the next trade at the margin. If there are no sellers at a certain price level and the next ask is at a higher price, the price immediately jumps up. This viewpoint challenges the conventional belief and opens up possibilities for continued exponential growth.
The Bitcoin halving, which occurs roughly every four years, involves a 50% reduction in the supply of new BTC issued by the network after each block. Many believe that the halving plays a crucial role in kickstarting bull market years through a BTC supply squeeze. However, some theorize that the multiplier effect caused by these halvings will diminish over time. Bernstein, for instance, predicted that BTC will peak in the next cycle at $150,000 in 2025 due to the law of large numbers.
Askew argues that the notion of diminishing halving effects disregards the decreasing supply of Bitcoin available over time as HODLers continue to accumulate. On-chain data from Glassnode supports this argument, indicating that Bitcoin’s “available supply,” which refers to coins that have moved within the past 155 days, is currently at historic lows. This HODLer accumulation could potentially fuel future demand and influence the price of Bitcoin.
Another critical factor in determining the future of Bitcoin is adoption. Despite its increasing popularity, most average individuals still have no exposure to BTC. Askew suggests that an unprecedented wave of new network entrants could disrupt previous price patterns and propel Bitcoin to new heights. With the potential to tap into every ounce of wealth and savings in the world, the total addressable market for BTC is massive, leaving room for an unfathomable amount of demand to penetrate the market.
Bitcoin’s price recently surged to $44,500, but subsequently cooled to $41,130 following a mass liquidation event on Sunday. While short-term price fluctuations are to be expected, the focus remains on the long-term implications of the halving and its effects on Bitcoin’s future growth.
The upcoming Bitcoin halving holds significant potential for shaping the future of the cryptocurrency. Mitchell Askew’s optimistic outlook challenges the traditional belief in diminishing returns, emphasizing the importance of considering the marginal trades that determine BTC’s price. The interplay between HODLer accumulation, adoption rates, and unprecedented demand sets the stage for a potentially explosive market. As the halving approaches, investors eagerly anticipate whether Bitcoin’s exponential growth will continue, driving the cryptocurrency to new heights.