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Common argument:

1. Halvings introduce no new information about supply.

2. If so, halvings cannot influence price.

3. Therefore, halvings cannot influence price (1 and 2).

I think halvings are priced in, but reject both premises.

Against 1: halvings can introduce new information about supply. They show, with certainty, what was before only expected to some high degree -- that new supply coming to market will soon dramatically click downward.

Against 2: halvings can also introduce new information, not about supply, but about demand. What if you discover, time and again, that people quite stupidly respond to halvings by buying? The first few times, that's new information! And when it stops, that's new information too!

Why do I think halvings are still priced in? Because they're *now* priced in. These effects are known, and known to be known, and negligible after the first few halvings.

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Discussion

Gerald Glickman 2y ago

Fascinating to ponder.

My POV: just because we have information and a high-level of confidence doesn't mean we always rationally take action with that information. Yes, Bitcoin futures now have a large and liquid market, but it is still very reactive to narratives, and narratives are reinforced and amplified by actions (human and otherwise) not yet taken.

Even when that first action is 100% predictable (halving) , the results of the amplified narratives are unclear even when they might seem logical / clearly causal.

Humanity's understanding of Bitcoin is not priced in, let alone a specific event like a halving. Bullish. Also, I have no clue!

Bayman11771 2y ago

I agree with your premise. A lot of Bitcoiners will hate this, but the price action over the last month has been driven by ETF expectations. I don’t think new buyers are thinking about the halving. Although the institutional research that has driven this push toward ETF approval certainly took timing into account, new money only sees “Blackrock buying” over the next few months. But that’s fine, impact will eventually catch narrative.