Bitcoiners smolder their BTCs ahead of the Halving

Never have so many bitcoins gone so long without changing ownership. Everyone is waiting for the halving impatiently.

HOLD!

Glassnode reported last week that 68% of BTCs have not changed ownership for at least a year. The figure is 55% over two years and 40% for three years.

The cohort of maximalists continues to grow. And how could it be any different when you see the allure of debt, bank failures across the Atlantic, the war in Ukraine and peak oil apparently reached in November 2019.

The tension is palpable. Despite the prosperous years, this is not “the end of history”. The monster inflation of recent years is there to remind us that we must not rest on our laurels.

The bitcoin custodial trend contrasts with the long-term evolution of U.S. multinational stocks. Coindesk writes that the US stock market is a market in which investors no longer stay in position as long as before.

Geopolitical upheavals, Chinese economic power and the energy transition are reshuffling the cards. Very clever who will know which multinationals will come out on top in this pivotal time.

The biggest stumbling block being (in yours truly’s humble opinion) peak oil. Nearly 95% of global transport requires oil (including 1/3 for the transport of food, etc.).

The electric car is not a viable alternative. It depends on infrastructure and parts that rely on oil (roads, tires, plastics, ore extraction, etc). No road transport system can survive without the constant supply of oil.

The energy decline imposed by the scarcity of oil will inevitably weigh down global productivity. This will necessarily follow from inflation against which Bitcoin offers a fair escape.

As such, do not miss our article: Why so much debt?

Halving

Every four years, the number of BTC created to reward miners is halved. Bitcoin is designed so that its money supply never exceeds 21 million units.

This limit is allowed by the decentralization of bitcoin and guaranteed by the natural incentive not to change the protocol. Indeed, the masses of node-guarding bitcoiners will always have an incentive not to devalue their property.

This is why bitcoin is the greatest store of value in history. Conversely, the more the price of gold rises, the more it will come out of the ground.

After the next halving (in less than a year), the stock-to-flow-ratio of bitcoin will for the first time exceed that of gold.

This ratio is obtained by dividing the existing quantity of gold (187,000 tons) by the quantity of gold produced each year (3,000 tons).

187,000 / 3,000 = 62

Clearly, it takes 62 years to produce the total amount of gold that already exists. The higher the ratio, the rarer the thing studied.

This ratio is currently 59 for Bitcoin, but will explode to 120 from the next halving. The barbarian relic will then be definitively out of competition.

Here is the impact of the latest halvings on the value of bitcoins:

Halving 2016: $661
One year later: $2,550 (x3.8)

Halving 2020: $8,800
One year later: $57,000 (x6.4)

Halving 2024?…
One year later ?

It’s no wonder everyone is clinging to their bitcoins lately. The dynamics of supply and demand will change radically within a year. And the value of bitcoin too.