But there is a new kind of demand in the market, which outweighs the initial demand from retail investors who have been buying for over 12 years. This demand mixed with decreasing supply issuance and removing BTC from the market is the perfect formula for wild price swings. I’ll go into more detail on this new demand later in this article, but for now, let’s look at the past performance of halves to see what we’re up against. On November 28, 2012, the very first halving occurred, dropping the base start mining reward from 50 BTC to 25 BTC. 365 days before the halving, the price of bitcoin was $ 2.54. Over the next year, as the supply shock kicked in, bitcoin soared to $ 1,007 before cooling off a bit, for an increase of over 8,000%.
On July 16, 2016, the second halving took place, increasing the mining reward from 25 to 12.5 BTC. 365 days before the halving, the price of bitcoin was $ 269.68. Over the next year, as the supply shock kicked in, bitcoin climbed to $ 2,506 before cooling off a bit, for a 284% increase. On May 18, 2020, the third Bitcoin halving took place, increasing the mining reward from 12.5 BTC to 6.25 BTC. 365 days before the halving, the price of bitcoin was $ 7,300. Over the next year, as the supply shock occurred, bitcoin hit $ 64,840, an increase of 788%.
At the time of writing, it is estimated that on May 8, 2024, Bitcoin will experience its fourth halving, dropping the mining reward from 6.25 to 3.125 BTC. And in the spring of 2028, Bitcoin will experience its fifth halving, dropping the mining reward from 3.125 to 1.5625 BTC.
It is impossible to predict the exact amount of bitcoin demand. Therefore, it is difficult to predict by how much the price will increase after these halving cuts, but it is safe to assume that the price outlook is very bullish and the next nine years could look like this (or better):
While this is true, it ignores all of the factors that explain why bitcoin will continue to soar. The world has a store of value problem, and the free market has determined that bitcoin is the solution to that problem. Wealth is now pouring into Bitcoin, which is expected to be the top performing asset of the decade for the second decade in a row.
The limited supply of 21 million Bitcoin combined with growing demand ensures that its price will continue to rise.
As I mentioned earlier, it’s not just ordinary people buying and HODLing anymore, which in the past caused big price swings. Today billionaires and corporations put it on their balance sheets and countries make it legal tender. This is a global race to accumulate as much BTC as possible. They don’t make more than $ 21 million and everyone wants their piece of the pie.
The first domino has fallen and game theory is even more at stake than ever before since El Salvador became the first country to make bitcoin legal tender. Get ready, get ready, go – all countries are now in a race to make bitcoin legal tender and put it on their balance sheets. In the bill that was passed in El Salvador, merchants will have to accept bitcoin as a means of payment. This means that large companies need to educate themselves and use bitcoin on a daily basis, which, after seeing the many benefits of BTC, could prompt them to use bitcoin in other countries like the United States …
Some countries are already feeling the stress of not having adopted bitcoin, and the more they adopt it, the more others will want it. Gabriel Silva, Member of the Panamanian Parliament, mentionned on the subject: “It’s important. And Panama cannot be left behind. If we want to be a true technological and entrepreneurial hub, we must support cryptocurrencies. We will prepare a proposal to present to the Assembly. If you are interested in building it, you can contact me.
Every country on planet Earth that has not adopted a Bitcoin standard lags behind those that do. Bitcoiners have all the wealth, and countries will want our business. Countries will offer tax benefits, citizenship to the country, open government-owned land to the public for new real estate developments, bitcoin mining incentives, and more.
“We want Bitcoiners to move here. Declared Salvadoran President Nayib Bukele. Soon the leader of each country will say these words. Those who say it first will be the biggest winners.This is going to cause a massive influx of wealth into Bitcoin unlike anything we’ve seen before. The world is revalued in bitcoin. You and I already know that, but the rest of the world hasn’t figured it out yet.
This is a guest article by Nik Hoffman. The opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.