Contributing to this optimistic outlook is the highly anticipated event known as the halving of bitcoin, or as some may find it, “the halving.” Despite the often-cited notion of “buy the hype, sell the news,” the halving actually has a significant impact on increasing the value of bitcoin.
Bitcoin, being a limited asset, experiences a reduction in its token supply every four years through a programmed algorithm, hence the name “halving.” This scarcity has been a driving force behind the increased demand for bitcoin and its subsequent rise in value.
According to Antoni Trenchev, co-founder of crypto lender Nexo, the next halving event in 2024 will be the ultimate geek event for Bitcoin enthusiasts. Historical trends suggest that the peak of Bitcoin’s value may not occur until 2025, with 2024 serving as a prelude to the main event.
Trenchev predicts that bitcoin could soar over $100,000, surpassing its all-time high of $69,000 in November 2021. This surge in value is expected to be fueled by a combination of factors, including the anticipated approval of a spot ETF (Exchange-Traded Fund) and the halving event itself, which is projected to take place in the spring.
However, Trenchev also acknowledges that the road to $100,000 will not be without its challenges. Just like any investment, bitcoin is prone to unexpected market fluctuations and double-digit drops. In the words of Warren Buffett, “Transfer money from the impatient to the patient.” This famous quote serves as a reminder to investors to stay calm and resilient in the face of market volatility.
Anthony Scaramucci, the founder of SkyBridge Capital and a longtime advocate of bitcoin, holds an even more bullish forecast. He predicts that bitcoin will reach a staggering $140,000 by the end of the year, according to his insights shared with digital media site Semafor.
While these predictions showcase the optimism surrounding bitcoin’s future, there are also concerns regarding the potential impact of the halving on miners. Miners rely on transaction fees to sustain their operations, and a significant reduction in rewards from the halving could pose challenges for their profitability. If miners don’t see a sufficient return on their investment, they may decide to turn off their mining equipment, which could have catastrophic implications for the Bitcoin network.
Additionally, there is a conceivable scenario where the majority of bitcoins in circulation end up being owned by the biggest wealth managers in China and the West. This could occur due to a widespread belief that money is a store of value, coupled with people’s hesitation or confusion in acquiring and storing bitcoins in self-custodial wallets. Instead, they opt to invest in Bitcoin ETF derivatives. In such a scenario, a small number of corporations controlling the entire bitcoin supply, combined with their lack of interest in utilizing the Bitcoin network, could result in a stagnant price for bitcoin. This, in turn, would create financial constraints for miners, making it financially unviable for them to continue mining. In the words of Hayes, “Goodbye, Bitcoin!”
This potential downfall of bitcoin leads Hayes to hypothesize about the fate of cryptocurrencies in such a crisis. He speculates about the emergence of a new crypto-monetary network, which could be an updated version of bitcoin or an entirely new digital currency.
Interestingly, the approval of BlackRock’s Bitcoin ETF by the US Securities and Exchange Commission (SEC) in early 2024 is generating significant anticipation and driving the overall hype surrounding the cryptocurrency market. There are talks of potential mass approvals for Bitcoin ETFs in the coming year, and a recent leak indicates that the SEC has set a deadline for “final updates” on these applications by December 29.
The involvement of powerful Wall Street figures and the implementation of new regulations in 2024 could potentially bring about a transformative shift in the cryptocurrency market. Hayes believes that this marks the beginning of the end for bitcoin, as increased regulations could stifle its usage as a financial asset. He envisions a scenario where bitcoin’s demise creates an opportunity for a new cryptocurrency network to emerge, whether it’s an upgraded version of bitcoin or an entirely new creation. Ultimately, this would give people back the ownership of a medium of exchange and a decentralized financial system, providing lessons learned from the first iteration of bitcoin.
In conclusion, Hayes asserts that while the optimal moment to invest in bitcoin may have passed, the second-best time is now. This highlights the growing realization within the investment world of cryptocurrencies’ value as a hedge against the potential depreciation of fiat currencies. Despite facing criticisms and insults, such as being referred to as a “talentless crook clown” by Nouriel Roubini, Hayes remains steadfast in his belief that bitcoin still holds immense potential for those willing to seize the opportunity.
In summary, the concept of the halving of bitcoin has gained significant attention and stands as a critical factor in driving its value. The predictions of industry experts regarding bitcoin’s future, coupled with potential challenges for miners and regulatory developments, shape the narrative of bitcoin’s fate. While there are concerns about its potential downfall, proponents like Hayes remain hopeful and confident in the opportunities presented by cryptocurrencies.
