Halving Bitcoin Reward Unlikely to Cause Price Surge

[sdp]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

The question is why don't YOU charge more now?   If I offer to buy at a marginally higher than market value from you,  You can say yes or no.   If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.  The buy side being nonbtc assets and is more or less constant.  So you know I will haveless options to buy from.  I would say you can feel more confident to ask more.

sdp

[odolvlobo]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.  The buy side being nonbtc assets and is more or less constant.  So you know I will haveless options to buy from.  I would say you can feel more confident to ask more.

Two things you have overlooked:

1. X grows every 10 minutes. What that mean if the buy side is constant?

2. Whether 12.5 or 25, it's very small compared to X.

[franky1]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

a lull period.. is a dead, slow, boring, stagnant period..
so we both agree
"If anything, the halving appears to have prevented a change in price" [during a normally active month]

and that was my whole point when talking about explaining the lull, because someone else was debating that the price did not shoot up as soon as november 29th(100confirms after halving).. so i was explaining the lull (slow, no movement)

lol read your post again.. then read mine.. because of the reward halving everyone sorted out their finances in november... thus not much happened in december.. causing a lull... now look at your numbers.. out of all the years which one had the least change... wait for it..

december 2012... so if you want to say that the month after the halving was not a lull (dull boring, nothing exciting).. then why is it that it you did not see a 18-50% price variance.. why was it only 6%

if you can explain away why 6% is not a lull/stagnant/boring/dull amount compared to other decembers of 18-56%.. then you sir deserve an economics award.

so with that said are you still saying that the december 2012 was not a december lull..?

[BitconAssociation]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

The question is why don't YOU charge more now?   If I offer to buy at a marginally higher than market value from you,  You can say yes or no.

Charge more for what? If you mean "anything that I sell," the answer is "because no one will buy my stuff if I charge more."

If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.

As odolvlobo mentioned in the post above, X in your "25 + X"? That X is nontrivial. That X is roughly 15.5 *million* BTC .
The sum total of BTC issued to date.
If analogies help, think of BTC_supply as a decent sized lake, and BTC_mined as a guy peeing a little into that lake every ten minutes -- that's roughly proportional.

The buy side being nonbtc assets and is more or less constant. ...

If I understand you correctly, you're saying that the demand is ~constant, in which case I disagree. While it is reasonable to guesstimate demand for food/oil/steel etc., this doesn't work for speculative assets like BTC.

If the food supply is reduced, food prices will likely go up -- to live, we got to eat.
If Beanie Baby supply is reduced,* OTOH, some of us may simply choose not to buy Beanies.
*With Teh Halvening though, we're not reducing the world supply of Beanies, we're only slowing the production line to the point where it adds only 12.5 new Beanies to the market.

[cjmoles]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

a lull period.. is a dead, slow, boring, stagnant period..
so we both agree
"If anything, the halving appears to have prevented a change in price" [during a normally active month]

and that was my whole point when talking about explaining the lull, because someone else was debating that the price did not shoot up as soon as november 29th(100confirms after halving).. so i was explaining the lull (slow, no movement)

lol read your post again.. then read mine.. because of the reward halving everyone sorted out their finances in november... thus not much happened in december.. causing a lull... now look at your numbers.. out of all the years which one had the least change... wait for it..

december 2012... so if you want to say that the month after the halving was not a lull (dull boring, nothing exciting).. then why is it that it you did not see a 18-50% price variance.. why was it only 6%

if you can explain away why 6% is not a lull/stagnant/boring/dull amount compared to other decembers of 18-56%.. then you sir deserve an economics award.

so with that said are you still saying that the december 2012 was not a december lull..?

franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

[BitconAssociation]

...
franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

Not to mention that the following year, BTC shot up to $1200 during that very same "December lull."

[franky1]

...
franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

usually december of each year is active.. people moving funds to cash out to buy gifts. and retailer moving funds for gifts bought. etc.
but in 2012 specifically most of the pools ((emphasis)who are the majority players on an exchange) done all of their financials BEFORE the halving so that they did not have to have to immediately worry about the consequences of the halving impacting them over that specific christmas period.. hense why there was a lull...

Not to mention that the following year, BTC shot up to $1200 during that very same "December lull."

the 2012 lull.. is not the 2013 rise.. they are totally separate events. so you saying its the "very same" is rediculous
i never said every december was a boring month.. but the specific december after the halving was..

separately the 2013 spike was due to ASICs coming onto the market. which can be easily seen by the release date of the first asics, and the start of the large rise.. which peaked a couple months later. before speculation bubble then burst due to mtgox issues and other things.

do not confuse the 2013 saga with the 2012 halving saga.

[BitconAssociation]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

Are you suggesting that unique events, like that December 2012 lull, are not cyclical, unlikely to be repeated, and therefore worthless for us sage price prognosticators?

Could it be that we actually agree that dumb shit like an exchange going rogue or a 20-something being popped for trying to hirie feds to murder his buddies, that those are the events really driving BTC price?

[BTC-Joe]

Just wanted to point out some things in response to what was said here:

- Miners will sell coins at "double" the price to compensate for drop in reward.

This isn't going to happen. Firstly, because the total BTC is arbitrarily capped at 21 million, as more coins are mined the influence that miners can exert on the price of BTC diminishes substantially. In the early days around 2011 you had around 4-6 M coins in circulation. In Q4 2013 you had around 11M. As of this message you're looking at around 16 M coins, which leaves 5M more to be mined.

The price of bitcoins is now more market-driven by those who already have them, while Q4 2013 was somewhat of a turning point where the advantage shifted away from those mining to the market.

- Fewer coins mined will decrease supply

Nope, the coins already discovered are not going away. Supply was always capped and it never diminishes.

- Big price jumps after previous halving

The price jumps were not due to the halving event itself. There were and still are plenty of other variables with far more influence on the price of BTC, such as how well they are being adopted into the marketplace as a form of payment...which today is a lot more than it was even 3 years ago.

- My BTC will jump to $2,000 per coin and I'll be rich

If there is a sudden price jump like that, don't expect most exchanges to honor sales at those prices. They will not have anywhere near the liquidity to cover a run-on of sell orders for $2K per coin. Even if all exchanges combined together they wouldn't be able to cover it, so while the chart may show $2K you won't be able to sell at that price.

[franky1]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

you are soo ...................

ok some standard psychology...
every year people care about christmas and new year celebrations.. ((emphasis) every year)

but in 2012.. ((emphasis 2012 only) the reward halving cause people to prepare a bit earlier by sorting their finances out early ((emphasis 2012 only)

this explains why there was a lull in ((emphasis) december 2012 only) because they didnt need to use coins as much..

then when january 2013 arrived and people got back to business, bills started arriving.. then the consequences of the halving really started to hit people because there was little noticeable impact during december because no one was really paying bills or cashing out during december.. but now the bills are arriving again and things needed to change.

so the january/february period is where you see the price movements happen due to the reward halving.

[franky1]

Just wanted to point out some things in response to what was said here:

- Miners will sell coins at "double" the price to compensate for drop in reward.

This isn't going to happen. Firstly, because the total BTC is arbitrarily capped at 21 million, as more coins are mined the influence that miners can exert on the price of BTC diminishes substantially. In the early days around 2011 you had around 4-6 M coins in circulation. In Q4 2013 you had around 11M. As of this message you're looking at around 16 M coins, which leaves 5M more to be mined.

you are assuming that all 16million coins are ALL on an exchange and ALL being traded to ALL add some significance to the market value..

im sorry but on average only 10k to 100k volume(per exchange) is moved per day and is usually based on about 3k-30k of real coins being moved a few times a day to total the daily volume.

so the reality is that the bitcoin price of all 16million coins is not based on the trades of 16million coins per day.. but usually less then a hundred thousand coins..

remember not all 16million coins are on exchanges.. no where near that many. so when you realise that it is only a smaller amount contributing to the market value, then you see who is hoarding the majority of that market making value.. you will see that pools do have the power to move prices, should they be motivated to.

[Monnt]

Miners are the deciding factor in the price. They still most probably make actions to push the price up. I do understand what you are saying. The price won't double, but it will rise about 60-70%.

[Quickseller]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

This is true, however you (and others) are overlooking one important fact.

Right now there are sufficient buyers in the market so that the price will ~stay the same when there is ~3,600 additional BTC sold throughout the various markets. After the halving occurs, there is no reason why these buyers will start to want to buy less BTC every day, however the miners will have less BTC to sell every day because of lower block subsidy.

In other words, right now buyers are buying roughly 3,600 additional BTC every day and sellers are selling roughly 3,600 new BTC every day. After the halving sellers will be selling roughly 1,800 additional BTC every day so the buyers are going to need to offer higher prices or else they will not be able to buy what they are wanting to buy.

[BitconAssociation]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

you are soo ...................

ok some standard psychology...
every year people care about christmas and new year celebrations.. ((emphasis) every year)

but in 2012.. ((emphasis 2012 only) the reward halving cause people to prepare a bit earlier by sorting their finances out early ((emphasis 2012 only)

this explains why there was a lull in ((emphasis) december 2012 only) because they didnt need to use coins as much..

2010: price went up in December
2011: price again went up in December
2012: lull because Teh Halvening
2013: price went up skyrocketed in December  

^^TL;DR: ♫ Here is my handle/here is my spout ♫

I can't possibly convince you, that's the very essence of idee fixe: everything else must be reconciled with it, and everything appears to you as proof of your correctness re. you being a short & stout teapot.

If reality fails to comply, it won't be due to your *not* being a teapot, but the willful blindness/ignorance of others, and possibly nefarious forces (see: banksters & their lapdogs, the statist jackboots) brainwashing the sheeple into not accepting your teapotty essence.

[BitconAssociation]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

This is true, however you (and others) are overlooking one important fact.

Right now there are sufficient buyers in the market so that the price will ~stay the same when there is ~3,600 additional BTC sold throughout the various markets. After the halving occurs, there is no reason why these buyers will start to want to buy less BTC every day, however the miners will have less BTC to sell every day because of lower block subsidy.

In other words, right now buyers are buying roughly 3,600 additional BTC every day and sellers are selling roughly 3,600 new BTC every day. After the halving sellers will be selling roughly 1,800 additional BTC every day so the buyers are going to need to offer higher prices or else they will not be able to buy what they are wanting to buy.

1.

... you're saying that the demand is ~constant, in which case I disagree. While it is reasonable to guesstimate demand for food/oil/steel etc., this doesn't work for speculative assets like BTC.

If the food supply is reduced, food prices will likely go up -- to live, we got to eat. (demand does remain the same)
If Beanie Baby supply is reduced,* OTOH, some of us may simply choose not to buy Beanies. (demand @low prices > demand @higher prices)
*With Teh Halvening though, we're not reducing the world supply of Beanies, we're only slowing the production line to the point where it adds only 12.5 new Beanies to the market.

... Bitcoin is a purely speculative commodity. It's not like oil, which is consumed at a roughly predictable rate, so that cutting supply sends prices skyrocketing.

Bitcoin is different. Bitcoin demand is like demand for potato in a game of hot potato, or for seats in a musical chairs game, or for an ace in a game of Black Jack: People don't need to buy btc like they do oil and food -- they can simply *not buy* BTC & walk away when the game stops being fun. And move on to Ether, or BBQ coin, or whatever looks fun at the moment

2.

... If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.

As odolvlobo mentioned in the post above, X in your "25 + X"? That X is nontrivial. That X is roughly 15.5 *million* BTC .
The sum total of BTC issued to date.
If analogies help, think of BTC_supply as a decent sized lake, and BTC_mined as a guy peeing a little into that lake every ten minutes -- that's roughly proportional.

[Quickseller]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.   

There are a lot of speculators in bitcoin, however there are real world applications for Bitcoin that is not dependent on it's price. Although it would not be quite as trivial, it would be possible to stop buying oil and to instead buy alternatives when the price of oil gets to be too expensive.

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

[Wapinter]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Halving will attract more users to bitcoin due to media hype.Resulting in high demand for bitcoin, this can lead to price hike and once it triggers price rise,chances are it will touch $1000

[franky1]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.  
 

the demand is not 3600.. nor is it 16million..

the market demand is a few hundred thousand, divided by a number of exchanges.. so under 100,000 coins a day(once you subtract the fact that the same coins are swapped a few times a day)..

but.
pools own a nice large stake of coins played around on the exchanges. so if they know their daily fresh income from mining is decreasing.
they also know that demand is 100k ish on exchanges ((emphasis) 2 separate bundles of funds)... so they will move lets say 50k of they reserves out.. meaning that the supply of tradable coins on exchanges changes and causes a price rise.

in short the block reward does not directly cause a price rise.. however its the efforts and motivations and reserves held by the pools on the exchanges that help move the price to compensate themselves for the lower incomes they are getting via mining

[cjmoles]

So, I'm not sure, given bitcoins history of volatility, that we can accurately predict what's going to happen after halving using traditional economic principles.  We all learned things from past experiences here, so might some of those lessons be reflected in the next event?  Will there be many who wait until the actual event to buy?  Will they start moving earlier?  Will they wait for a spike to dump?  Too many non traditional variables....it's starting to hurt my brain cell.  I have resolved myself to the belief that much of the upward movement has already taken place and if there is any upward pressure after halving, it would be negligible. However, I am in position to take advantage of any temporary spikes or dips that I believe will occur due to the hype factor.

[BitconAssociation]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.  

BTC  supply is not going down, it's increasing by 25 BTC, every 9 or 10 minutes. It's the rate of increase that's going to be lower, the supply is going to continue increasing.

And, of course, BTC is not a typical commodity.  BTC is never consumed/destroyed (not like oil/consumables, or even durables)

There are a lot of speculators in bitcoin, however there are real world applications for Bitcoin that is not dependent on it's price. Although it would not be quite as trivial, it would be possible to stop buying oil and to instead buy alternatives when the price of oil gets to be too expensive.

Yes, it is possible to stop buying oil, but not_buying_oil only becomes practical if the prices are ~x5 the current.
Not buying BTC, OTOH, is trivial & would create problems for shutin bath salts enthusiasts & pedos only

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

Right. If miners need to sell the bulk of BTC they mine today, there's gonna be a shitshow come Teh Halvening.
Because that "bulc of BTC" gonna be cut in half. Clearly not enough to pay the bills, forget PROFIT!
wat do

... I am in position to take advantage of any temporary spikes that I believe will occur due to the hype factor.

Not unless you're one of the exchanges (with access to *all* the data and zip regulatory interference) you're not. ~3 years ago you probably could, if you had good friends. Now you couldn't. Or, rather, I couldn't.