Bitcoin: 13 hours to the halvening - Get out of leveraged positions and stand by for turbulence.


If you have been following me, you would know that I have been looking forward to the halvening for more than a year:

At that point, the halvening was estimated to appear at the 22th of May 202. It appears that we are a few days early, but all in all, it wasn't a too bad estimate.

In the short term, I would expect wild price swings and I there for recommend you to get off any leveraging. Personally, I have posted buy orders at around 6K - 7K USD and sell orders above 12K. Of course, we could also see absolutely nothing happening, but I doubt that very much.

How are you preparing?

If you have never hear about the halvening, you can read my explanation from a year ago:
The short answer:
Supply and demand. We are currently generating 1,800 new Bitcoins per day currently worth around 14.2 Mio USD and that will drop to 900. Assuming that minors sell a proportion (for instance half) of their mined coins to pay for their operations, this sell pressure will instantly be cut in half. If the miners today are selling 50% of their coins there is currently a need of 7.1 Mio of dollars buying lest the price should fall. After a halvening, this would fall to 3.55 Mio of daily sell pressure.

Longer answer:
The inflation of Bitcoin will be reduced, increasing the stock-to-flow ratio (how much there is vs how much there is produced). Today, roughly 17.65 Mio. Bitcoins have been mined. Currently, one year of mining will yield 0.657 Mio. Bitcoins or a ratio of mining to the stock (stock-to-flow or SF for short) of ~ 26. An SF of 26 is actually better than most metals and comparable with silver. It is still only half that of gold though. At the next halvening, we should have mined around 18.3 Mio Bitcoin. With the production falling to half that, we should expect an SF of 55.7. This is getting comparable to gold which has an SF of 62.

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