Every four years, the number of BTC issued per block gets cut in half, resulting in an effective 50 percent reduction in the inflation rate of the cryptocurrency. The argument is that halvings skew the supply-demand dynamic in favor of price appreciation as these events effectively reduce market supply.
Ethereum founder discusses issues with Bitcoin’s halving narrative
On Jun. 14, the Russian-Canadian crypto wunderkind took to Twitter to challenge the narrative, opining that the “halvings cause BTC price rises” theory is “unfalsifiable.”
“The ‘halvings cause BTC price rises” theory is unfalsifiable: Was the peak before the halving? Then it ‘rose in anticipation of the halving’ During? ‘Because of the halving’ After? ‘Because of…’
He’s saying that believers in the sentiment that Bitcoin halvings affect price in a positive manner can “move the goalposts,” so to say, by attributing any rally in the BTC price as an effect of a halving.
To give an example of why he thinks the theory is flawed, he pointed at Bitcoin’s $20,000 peak in 2017, reminding people that “the last $20k peak was near the halfway point between the 2016 and 2020 halvings.”
Bloomberg’s Joe Weisenthal, who has been commenting on cryptocurrencies for years now, echoed this in February by writing:
“[Someone] wants to propose a bet on whether the Bitcoin halving will prove to have been priced in. Problem is it’s hard to define a clear test for that, because defining why any asset moves in any circumstance can be extremely difficult.”
Both Weisenthal and Buterin are critics of the Stock-To-Flow (S2F) Model, which predicts that Bitcoin will rally to $100,000 in the coming two years due to the halving. Buterin doubled down on his criticism of the subject on Jun. 14 by saying that he “disagrees with S2F.”
There are other reasons to be bullish
That’s not to say that there aren’t any active factors boosting the Bitcoin bull case. Far from, actually.
As reported by CryptoSlate previously, Bloomberg senior commodity strategist Mike McGlone wrote in a report published at the start of June that “something needs to go really wrong for BTC not to appreciate.”
His bull case boiled down to a number of factors that include but are not limited to, Bitcoin’s decreasing volatility, the increasing adoption of BTC futures on the CME, Grayscale Investments‘ Bitcoin investments, a high correlation with gold, central bank money printing, and there being similarities between the start of the 2016-2017 rally and today.