Can halving the block reward actually reduce the price?

[inBitweTrust]

Another thing to consider is the psychological effect that will be created if Bitcoin crosses over the 1100-1200 thresh-hold a second time(This time for real, as last price was artificially created by willy and markus). Us old-timers know of the bubbles and subsequent crashes and are comfortable with these growing pains for an emergent technology, but with most of the public they aren't so sure that Bitcoin will ever reach new heights again. Crossing that barrier a second time will give confidence that the Austrian model of disinflationary currency does have validity and bitcoin is a good store of long term value.

Expect to see a spike in adoption as people grow more confident with Bitcoin once this happens which will further have a feedback loop of self re-enforcing behavior.

[FandangledGizmo]

I think the block halving will definitely have a positive price effect.

The question is how much of the general downtrend is caused by the current inflation.
I noticed that LTC fell 3X more than BTC last year and is has 3X the inflation, perhaps coincidental, obviously less inflation is always better but if there is something to that, the block halving will definitely be positive.

I have a strong theory though that the general downtrend is caused by the majority of businesses exchanging BTC immediately for fiat. 2014 was actually a great year for BTC in terms of investment, development, publicity and growth in utility yet the trend was consistently down. This constant selling pressure that isn't offset by corresponding demand is to blame imo.

[odolvlobo]

So, given the same demand for new coins,
and half the supply, the price should theoretically double.

Mining revenue is only a small portion of the supply. Halving the reward will not halve the supply.

Also, remember that "supply" is really a curve and not a number, though people may also refer to a point on the curve at a particular price as the "supply".

[jonald_fyookball]

So, given the same demand for new coins,
and half the supply, the price should theoretically double.

Mining revenue is only a small portion of the supply. Halving the reward will not halve the supply.

Agree, and note that I didn't say that.  I said demand for NEW coins.

[odolvlobo]

So, given the same demand for new coins,
and half the supply, the price should theoretically double.

Mining revenue is only a small portion of the supply. Halving the reward will not halve the supply.

Agree, and note that I didn't say that.  I said demand for NEW coins.

Then you must have meant to write "... half the supply of NEW coins, the price of NEW coins should ...".


Either way, the chart is what you are assuming, but there is no theory about what the demand and supply curves look like or how the supply curve will react to the halving, so you don't really know that the price will double.

[orpington]

The next block halving will be Bitcoin's next catapult.

The trick is to accumulate as many as possible for as cheap as possible before that happens.

The price could easily dip to $200 first.

[poncho32]

What happened before the last halving? I was not involved in Bitcoin at the time but I heard the price started rising before the actual halving. A post here said it was priced in by the time the halving took place.

[jonald_fyookball]

So, given the same demand for new coins,
and half the supply, the price should theoretically double.

Mining revenue is only a small portion of the supply. Halving the reward will not halve the supply.

Agree, and note that I didn't say that.  I said demand for NEW coins.

Then you must have meant to write "... half the supply of NEW coins, the price of NEW coins should ...".

  

Well, the price of all coins would be the same, but I think we're getting into semantics and
irrelevant pontification.

[Bernard Lerring]

Given that the reward halving is just over 18 months away, does anyone think that by then we will hopefully have a lot greater adoption of Bitcoin?

If this is the case, there will be a hell of a lot more users buying electronics, holidays and other luxury items with Bitcoin. The companies that are accepting BTC as payment may be less likely to convert straight to fiat too.

If the above is the case in 18 months time would it give greater stability to the market and prevent whales from exploiting the price by pumping and dumping? The above scenario would mitigate large downswings, yes? So we might see the value bump up immediately at the time of halving without too much drop.

Does my thinking make sense?

[johnyj]

No need to wait for that day, long before that fiat money will be flooded everywhere thus make bitcoin automatically stronger

[mestar]

miners will be getting less rewards, they will be dumping more

Bulletproof logic.

[mestar]

After all, nothing happened to the price at the last block halving.  

Yes, nothing, except that small thing where the price went from around $5 to $1000.  So, yeah, nothing happened.

[jonald_fyookball]

Given that the reward halving is just over 18 months away, does anyone think that by then we will hopefully have a lot greater adoption of Bitcoin?

If this is the case, there will be a hell of a lot more users buying electronics, holidays and other luxury items with Bitcoin. The companies that are accepting BTC as payment may be less likely to convert straight to fiat too.

If the above is the case in 18 months time would it give greater stability to the market and prevent whales from exploiting the price by pumping and dumping? The above scenario would mitigate large downswings, yes? So we might see the value bump up immediately at the time of halving without too much drop.

Does my thinking make sense?

yes but just speculative.  we don't know how adoption will go in next 18 months.

[panju1]

The conventional thought is that the next block halving will increase the price. However could this be completely wrong since if the miners will be getting less rewards, they will be dumping more and also shutting down their machines. We have seen theories that the price drop in recent months is due to miners not holding. Thus if the reward size is smaller then there is less incentive to hold.

No....
Simple problem of supply and demand.
Lesser supply, same demand, price increases.

[odolvlobo]

Simple problem of supply and demand.
Lesser supply, same demand, price increases.

The supply of bitcoins is always increasing. Halving the block reward only makes the increase slower.

[Ibian]

Suppose the demand stays the same. If the price doesn't move and half the miners shut down, that'l halve the network speed. For a time. Could be seriously bad PR, even if it isn't a technical problem.

[r0ach]

Any real demand isn't created with a halving.

This is nonsensical thinking.  Eventually, after enough halvings, Bitcoin is either going to be a store of wealth, or it's not.  For it to succeed, it has to be a store of wealth of some kind.  It doesn't matter if it's volatile, gold is volatile, it just has to be continuously worth something and fall in a somewhat sane trading range.

[SirChiko]

IMHO it should double the price as there is only 50% of coins to dump from them.

[panju1]

IMHO it should double the price as there is only 50% of coins to dump from them.

Miners aren't the only ones selling bitcoins. 

[kwukduck]

By the time block reward halves we will have gone through quite some more drama and we should be very lucky if it can spike the price back to double digits again.
I doubt there will be any market support though.
Just look at the decreasing volume, its decreasing even faster than the price.