David Lawant, head of research at FalconX, an online prime broker that offers digital assets trading, finance, and custody to the world’s leading companies. financial institutions, recently offered an analysis Tweets from X, formerly Twitter, about the role that Bitcoin halvings are playing in changing market dynamics. This analysis questions the conventional view that Bitcoin halvings have a direct and significant impact on its price. Instead, it highlights a wider economic and strategic framework that could be more deeply influencing market behaviour and investor perceptions.
Miners’ Impact on Bitcoin Prices is Diminishing
Lawant starts by discussing the impact that Bitcoin miners have had on the market. He shows a graph that clearly marks the dates for the different mining revenue levels and the Bitcoin traded volumes from 2012. previous halvings. These data reveal a major shift in the market: “The most crucial chart for comprehending halving dynamics is the one below, not the price chart. It illustrates the proportion of total mining revenue compared to BTC spot traded volume since 2012, with the three halving dates marked.”
In 2012, the total revenue of mining companies was many times the amount traded daily, which showed that miners were able to have a significant impact on the markets. This figure was a double-digit proportion of daily trading volume in 2016, but since then has declined. Lawant emphasizes, “While miners remain integral to the Bitcoin ecosystem, their influence on price formation has notably waned.”
This is due in part to diversification and sophistication among Bitcoin users. financial Instruments within the crypto market. Furthermore, not all mining revenue is immediately impacted by halving events—miners may choose to hold onto their rewards rather than sell, affecting the direct impact of reduced block rewards One supply.
Lawant argues that the timing of half-offs is linked to larger economic cycles. He suggests halvings are not isolated but occur alongside major monetary policy changes. It is this juxtaposition that increases the impact of halvings as it highlights Bitcoin’s characteristics of scarcity, decentralization and volatility during times when traditional financial systems are stressed.
Bitcoin halves tend to take place during times of critical importance monetary policy Lawant says that the story is too well-fitted to ignore their influence on prices. This statement indicates a psychological or strategic aspect where Bitcoin’s perceived scarcity is more apparent.
It then turns to the influence of macroeconomic conditions on Bitcoin. Lawant quotes investor Paul Tudor Jones’ 2020 talk. labeled The economic climate is “The Great Monetary Inflation,” A period of aggressive central bank monetary expansion. Lawant believes, “I’d argue that this was a more important factor in the 2020-2021 bull run than the direct flow impact from the halving,” Pointing out that macroeconomics factors could have had more of an impact on Bitcoin’s price than halving.
Future Prospects: Macroeconomics Over Mechanics
Lawant predicts that, as the world enters into a new phase marked by economic insecurity and the possibility of monetary reforms (and thus a possible price halving), macroeconomic factors, rather than mechanical aspects, will determine the Bitcoin’s future movements.
“Now in 2024, the concerns center around the aftermath of the fiscal/monetary policies that have been in place for decades but are getting turbocharged in a world that is very different from four years ago. […] We are potentially entering a new leg of this macroeconomic cycle, and macro is becoming a more critical factor in BTC price action,” He ends.
This perspective suggests that while the direct price impact of Bitcoin halvings may diminish, the broader economic context will likely highlight Bitcoin’s fundamental properties—immutability and a fixed supply cap—as crucial anchors for its value proposition in a rapidly evolving economic landscape.
BTC is currently trading for $62,873.
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Featured image created with DALL·E, chart from TradingView.com
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