Bitcoin Halving and Market Maturity

There are many different forces at play, so no one knows how this will play out. That said, there are certain things we do know.
Source: BitIRA

Demand is key

First of all, the bitcoin price is always determined by the net demand for holding bitcoin. With a given amount of bitcoin available at any point in time, its value must adjust until investors realize their desired allocations, denominated in e.g. USD.

  • To make a simplified example: If there was only one bitcoin and two investors wanted to hold 1000 USD worth of bitcoin each, that would only be possible with bitcoin valued at 2000 USD a coin.

The current inflation rate is around 3.6% and will drop to 1.8% in May. This means that without a change in demand, the halving should only trigger a 1.8% price increase over the first year after the halving, relative to what would be the case without the halving.

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