[theory] long-term speculation

[declan-]

this is a crazy projection i have in mind, i don't know how accurate this theory will turnout to be, and please call me an idiot if you disagree with me, but i think i may have recognized a long-term pattern in the price of bitcoin.

this thought popped in my head when i was digging through the roots of cryptocurrency out of curiosity and boredom, and ever since i found this pattern i can't stop thinking about it. i'd love to hear the opinions of this from real crypto experts/aficionados.

as most of you know, the block reward currently stands at BTC12.5 and gets cut in half every 210,000 blocks. i always knew about this and didn't think much of it. that was until i came across this passage from an archive of bitcoin.org as it appeared in early 2009—just weeks after the first block was mined—which i believe was written by satoshi himself.

Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.

first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...

i am not 100% sure if this was actually written by satoshi, but whether it was or wasn't, it still comes from a very credible source. what really boggled my mind was the fact that whoever wrote this didn't mention anything about the mining reward halving every 210,000 blocks, but instead roughly estimated it halving every 4 years. their prediction didn't seem to be too far off, considering the fact that the first halving occurred in the fall of 2012, and the second one occurring during the summer of 2016.

but this really made me think long and hard... could it be possible that the halving of the block reward impacts the price of bitcoin in significant ways? i mean when you fast forward 4 years after the blockchain was born, in 2013, it went from being as low as ~$14 to astonishingly rising as high as $1,100+ all within the same year. and fast forward another 4 years to 2017, we see another astonishing jump in the price, with lows being under $900 and highs surging past $19,000 in the same year.

based off all of this information, i honestly can't see the rest of 2018 being a good year for the crypto market—as much as i hate saying it, because it goes against everything i'm invested in. but that isn't going to stop me from hodling, because i think 2021 will be the year we finally get to see bitcoin pass $100,000.

please let me know your thoughts on this. i hope my prediction ends up being right, and if i'm wrong, then so be it. i'm confident about this theory enough to put my money where my mouth is—unless one of you crypto geniuses talks me out of this crazy way of thinking.

[1Referee]

There is one major aspect that makes current phase very different from all the previous phases in the runup to the next halving, and that's a continuous progress of regulations taking place, allowing Bitcoin to be more accessible to all sorts of parties than ever before. Bitcoin's utility has never been this diverse, meaning that it allows itself to be used and utilized in so many ways, that we can't yet imagine how it will impact the longer term adoption, where Lightning Network is going to play a very crucial role. However, there is one but, and that's Bitcoin's current limitations that have proven to be an obstacle during intensive market times, where the bull run of last year functions as a perfect example.

In order to set that next step, it's crucial that Bitcoin does so with LN being utilized by at least 50% of the market, or at least 100% Segwit. I want a justified increase that allows people to move value back and forth without having to pay top fees during high intenstive market times, otherwise what's an increase worth if Bitcoin itself isn't ready for more adoption? That's why I find current levels to be a more than fair reflection of the situation, and thus not very low as some people think the current price is. If people feel the need to move value through altcoins instead of Bitcoin, then that's a sign that Bitcoin needs to step up its game. It's the hard reality. On-chain scalling isn't going to do it, then let it be off-chain. LN.

[oaktree]

but this really made me think long and hard... could it be possible that the halving of the block reward impacts the price of bitcoin in significant ways? i mean when you fast forward 4 years after the blockchain was born, in 2013, it went from being as low as ~$14 to astonishingly rising as high as $1,100+ all within the same year. and fast forward another 4 years to 2017, we see another astonishing jump in the price, with lows being under $900 and highs surging past $19,000 in the same year.

You are not wrong - the halvening has always had an effect on the price because the supply of new coins dumped on the market drops each halvening. so the sell pressure drops.

[jimbo2000]

but this really made me think long and hard... could it be possible that the halving of the block reward impacts the price of bitcoin in significant ways? i mean when you fast forward 4 years after the blockchain was born, in 2013, it went from being as low as ~$14 to astonishingly rising as high as $1,100+ all within the same year. and fast forward another 4 years to 2017, we see another astonishing jump in the price, with lows being under $900 and highs surging past $19,000 in the same year.

You are not wrong - the halvening has always had an effect on the price because the supply of new coins dumped on the market drops each halvening. so the sell pressure drops.

That's the simple fact of it. The halving definitely influences the price. The only disagreement I have is about how 2018 will go, I believe that again the price will shoot up with the next halving but I do suspect that we'll experience some growth before then. Bitcoin and the whole cryptocurrency market are much more mainstream and in a stronger position to grow than they were a few years ago.

[declan-]

There is one major aspect that makes current phase very different from all the previous phases in the runup to the next halving, and that's a continuous progress of regulations taking place, allowing Bitcoin to be more accessible to all sorts of parties than ever before.

but is the increasing adoption and mainstream interest of bitcoin influenced by the fomo on the price driving up? or is the recent rapid increase of price a result of increasing mainstream adoption?

despite the fact that there are multiple events and factors that influence the price of bitcoin, i believe there has to be something out there that influences the price more than anything else. and if it's anything that has a long-term impact on the price more than anything else, it's the block reward.

the laws of supply and demand dictate that the decrease of bitcoins being generated will increase the value of each individual bitcoin. people tend to want something more if it's harder to acquire. i can promise you that, this is coming from someone who collects rare/simple usernames on various social media platforms just because their availability extremely limited. value does not exist outside the consciousness of man, and wanting something that isn't easy to get only makes you human.

[Herbert2020]

you didn't have to go to the length of finding some archive and see what Satoshi has said! things such as supply of bitcoin and halving are like general knowledge. just google "bitcoin supply" and the first result is actually the thing you found in better words: https://en.bitcoin.it/wiki/Controlled_supply

as for the effect of it, so far in both halvings that we had the result was a big rise about 1-2 months before the actual halving then a correction and a slow rise afterwards because afterwards is when the sell pressure is actually lowered.

based off all of this information, i honestly can't see the rest of 2018 being a good year for the crypto market

i honestly don't see any reason why one should make such conclusion!
first halving has nothing to do with last year's rise nor does it have anything to do with 2018 performance, good or bad.
second, bitcoin performing good in 2017 doesn't mean it should perform bad in 2018. it may perform horrible or it may perform even better than last year. either way it has nothing to do with 2017 rise apart from the first months where we are in the correction and then panic mode.

[1Referee]

but is the increasing adoption and mainstream interest of bitcoin influenced by the fomo on the price driving up? or is the recent rapid increase of price a result of increasing mainstream adoption?

It's a combination. Fomo definitely plays an important role, especially because of how people throughout the years have been ignoring Bitcoin, and now suddenly see that they could have made the investment of their life years ago. Great side effect of Fomo is that regardless of people's initial goal (the investment aspect they don't want to miss out on), these people get to understand Bitcoin, and start exploring all posibilities this market has to offer. To cut a long story short, it's extra exposure for Bitcoin that results in adoption and more potential capital being pumped into this ecosystem.

despite the fact that there are multiple events and factors that influence the price of bitcoin, i believe there has to be something out there that influences the price more than anything else. and if it's anything that has a long-term impact on the price more than anything else, it's the block reward.

the laws of supply and demand dictate that the decrease of bitcoins being generated will increase the value of each individual bitcoin. people tend to want something more if it's harder to acquire. i can promise you that, this is coming from someone who collects rare/simple usernames on various social media platforms just because their availability extremely limited. value does not exist outside the consciousness of man, and wanting something that isn't easy to get only makes you human.

Correct. The lower the number of Bitcoins flowing into circulation on a daily basis, the lower the overall availability of on-market coins becomes, and thus the less potential pressure on the price. Great thing is that we have been in a very long phase where there is far more money flowing into this ecosystem, than coin value is being generated. This, especially in the longer term, has a major impact on the market, which we can clearly see when looking at the effect on the price after the previous block halving. The price increase in advance of the previous block halving was pure speculative.

Block rewards throughout the years per day/month/year.

50BTC - 7200BTC mint per day, 216,000BTC mint per month, 2,592,000BTC mint per year.
25BTC - 3600BTC mint per day, 108,000BTC mint per month, 1,296,000BTC mint per year.
12.5BTC - 1800BTC mint per day, 54,000BTC mint per month, 648,000BTC mint per year.
6.25BTC - 900BTC mint per day, 27,000BTC mint per month, 324,000BTC mint per year.

Numbers speak for themselves.

[tdrinker]

Block rewards throughout the years per day/month/year.

50BTC - 7200BTC mint per day, 216,000BTC mint per month, 2,592,000BTC mint per year.
25BTC - 3600BTC mint per day, 108,000BTC mint per month, 1,296,000BTC mint per year.
12.5BTC - 1800BTC mint per day, 54,000BTC mint per month, 648,000BTC mint per year.
6.25BTC - 900BTC mint per day, 27,000BTC mint per month, 324,000BTC mint per year.

Numbers speak for themselves.

Which years are these from?

It's quite plain to see from a simple economic point of view that this should contribute in some part to a decrease in supply on the market and an increase in price. While we cannot say for certain that the price will increase when there is a halving (because of the many other factors involved in determining supply and demand) we can say with almost absolute certainty that without a halving the price would be lower than with one.

[hase0278]

i honestly don't see any reason why one should make such conclusion!
first halving has nothing to do with last year's rise nor does it have anything to do with 2018 performance, good or bad.
second, bitcoin performing good in 2017 doesn't mean it should perform bad in 2018. it may perform horrible or it may perform even better than last year. either way it has nothing to do with 2017 rise apart from the first months where we are in the correction and then panic mode.

There is a good reason for one to make such conclusion. Halvingdo has something do with the rise way back 2013-2014 and the bullish run that have happened in 2017-2018 since it somehow affects the adoption rate of people to Bitcoin(and the demands for it). I also believe OP's conclusion not just because of his theory, but because of btc being overbought.

[digaran]

Compare daily mined coins with daily trading volume, we have 1800 Bitcoins mined every day, and we have 827,000 Bitcoins traded, halving has nothing to do with the long-term price. how fast you could have your money on exchanges does.

When you buy Bitcoin, what would you do with it? I would circumvent sanctions if exchanges are not regulated, they are regulated and I have no where to do my thing.

My theory: governments are making money, not beggars like me.

[timerland]

I completely agree.

I think that 2018 will pretty much be a year of consolidating at a lower price level. We may see a new all time high by the looks of it, but expect price to correct to around the current level eventually. 2019 will be uneventful as well, as far as i can tell.

What will be interesting will be 2020 and 2021. I think that there is a clear trend here. 2013's pump and 2017's pump, all came from 1 year after the halving. So if price does go down in 2018-2019, then it just means that it's a good time to accumulate while the rest of the market is already out of pocket and done with their bitcoins.

[Herbert2020]

i honestly don't see any reason why one should make such conclusion!
first halving has nothing to do with last year's rise nor does it have anything to do with 2018 performance, good or bad.
second, bitcoin performing good in 2017 doesn't mean it should perform bad in 2018. it may perform horrible or it may perform even better than last year. either way it has nothing to do with 2017 rise apart from the first months where we are in the correction and then panic mode.

There is a good reason for one to make such conclusion. Halvingdo has something do with the rise way back 2013-2014 and the bullish run that have happened in 2017-2018 since it somehow affects the adoption rate of people to Bitcoin(and the demands for it). I also believe OP's conclusion not just because of his theory, but because of btc being overbought.

that's the whole point of what i said. what i say is actually a pretty famous saying that goes "Past Performance Is Not Indicative Of Future Results". so if you say just because in the past bitcoin entered a prolonged bear market after its big rise, it will happen now too, than it is wrong and i disagree with it.

if you say it is overbought now, then it is a different discussion. and i guess we will soon see what is going to happen. price will either be back to 5 digits and rising in a couple of months with all this behind. or this theory is right and we see the bear market be extended some more.

[magneto]

this is a crazy projection i have in mind, i don't know how accurate this theory will turnout to be, and please call me an idiot if you disagree with me, but i think i may have recognized a long-term pattern in the price of bitcoin.

this thought popped in my head when i was digging through the roots of cryptocurrency out of curiosity and boredom, and ever since i found this pattern i can't stop thinking about it. i'd love to hear the opinions of this from real crypto experts/aficionados.

as most of you know, the block reward currently stands at BTC12.5 and gets cut in half every 210,000 blocks. i always knew about this and didn't think much of it. that was until i came across this passage from an archive of bitcoin.org as it appeared in early 2009—just weeks after the first block was mined—which i believe was written by satoshi himself.

Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.

first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...

i am not 100% sure if this was actually written by satoshi, but whether it was or wasn't, it still comes from a very credible source. what really boggled my mind was the fact that whoever wrote this didn't mention anything about the mining reward halving every 210,000 blocks, but instead roughly estimated it halving every 4 years. their prediction didn't seem to be too far off, considering the fact that the first halving occurred in the fall of 2012, and the second one occurring during the summer of 2016.

but this really made me think long and hard... could it be possible that the halving of the block reward impacts the price of bitcoin in significant ways? i mean when you fast forward 4 years after the blockchain was born, in 2013, it went from being as low as ~$14 to astonishingly rising as high as $1,100+ all within the same year. and fast forward another 4 years to 2017, we see another astonishing jump in the price, with lows being under $900 and highs surging past $19,000 in the same year.

based off all of this information, i honestly can't see the rest of 2018 being a good year for the crypto market—as much as i hate saying it, because it goes against everything i'm invested in. but that isn't going to stop me from hodling, because i think 2021 will be the year we finally get to see bitcoin pass $100,000.

please let me know your thoughts on this. i hope my prediction ends up being right, and if i'm wrong, then so be it. i'm confident about this theory enough to put my money where my mouth is—unless one of you crypto geniuses talks me out of this crazy way of thinking.

This has been suggested multiple times before, so it's definitely not some crazy speculation.

And these cycles actually make sense, because it's not just psychological. Bitcoin rewards are actually being reduced, and it essentially means that price has to go up to compensate for this drop off in emission of bitcoin.

First half of 2018 could still be an okay period, since we're just recovering from the crash. But second half could see some negative growth in price and trading volume. Media interest may not be as much as it was before.

Come year 2020, though, I think there is a huge possibility that prices will rebound from a crypto winter, if it does happen.

[ocid]

this is a very interesting analysis and I agree with you that in 2018 is a good time to store some bitcoin assets after a large-scale pump in 2013 and peak in 2017. and based on that analysis the golden year on bitcoin will peak until 2020.