If you’re prepping for, building up, coming in for a landing or even already there – you need to keep an open mind. How open? Somewhere in between concrete conviction, and a mind so open everything falls out.
If you want more, do more. If you want different –think different. If things have become hard – work harder.
If you’re stuck somewhere try something new.
If you’re interested in building wealth, or you’re already on your way. Wanting wealth is awesome, but it’s not enough. Unfortunately, the way we build wealth in the new world may different to how we do it today.
So all this to say, be open minded regarding bitcoin. I’ve been skeptical in the past – I get it. Digital assets will one day affect how we move value not just in networks…think nations and think globally. We’re dealing with superior financial technology during a time of global transition. The opportunity isn’t hidden in technical jargon (yet there is some technical jargon). Anyone can learn bitcoin, and everyone can take part.
This week we’re going to witness one of the most hyped events in all of crypto – the bitcoin halving – or havening. This magical time, occurs once every 4 years. This, is when we all celebrate when a small group of people get a pay cut.
Historically, ‘halvings’ have had a significant impact on the price of Bitcoin, but it should be pointed out the impact each time has been slightly less obvious. It’s simple economics though – as the supply decreases, assuming constant demand, price should increase. The anticipation of higher prices inevitably increases demand and consequently, an increase in price even further. This relationship between supply and demand is a fundamental principle that underpins much of why price increases with traditional investments too.
Of course let’s not forget the disclaimers here: past performance is not a guarantee of future results.
The introduction of Bitcoin ETFs (Exchange Traded Funds) and the growing acceptance of cryptocurrencies by financial institutions have increased the accessibility of Bitcoin to a wider range of investors. This increased demand could potentially amplify the effects of the halving on the price of Bitcoin this time around. Then again, what most Bitcoin holders understand well, is price volatility. The jury’s still out on whether or not the ETFs will increase, or decrease the wild price swings Bitcoin is known for.
The halving also presents challenges for Bitcoin miners. As mining rewards are halved, profitability of mining comes into question, pushing miners to find cheaper and cheaper sources of power (*This is why Bitcoin mining is actually good for the environment, it further incentivises the production of cheaper energy). We may witness a consolidation of the mining industry, with smaller and less efficient miners being forced out of the market over time. This could play out over decades however, an in the interim, more and more innovation is expected to occur (heat recycling, methane capture, renewables etc).
The Bitcoin halving will occur in April 2024. It could have profound implications for the price of Bitcoin and the mining industry. Halvings have historically heightened the price of Bitcoin. The ETFs (exposes Bitcoin to a wider and deeper pool of equity), further concerns about how central banks are handling the inflation problem they created, and heightened geo-political concerns could amplify these price-effects sooner.
