News
Bitcoin halving could allow the cryptocurrency long-term gains
Bitcoin (BTC-USD) the halving event is scheduled to occur this weekend, either Friday, April 19, or Saturday, April 20.halving event it works to reduce the number of available bitcoins in circulation once every four years, ultimately controlling inflation within the cryptocurrency.
CoinFund Co-Founder and CIO Alex Felix and BitGo CEO and Head of Go Network Matt Ballensweig join Market Domination to discuss bitcoin’s long-term price trajectory.
Ballensweig calls halving a “non-event” for bitcoin’s near-term scope, advising traders to “stick to the basics” in managing cryptocurrency-adjacent stocks, such as bitcoin miners. Felix believes bitcoin could rise between $150,000 and $200,000 over the next two years based on price progression following past halvings.
Want to know more about Bitcoin halving? Check out this video from Yahoo Finance for a quick explanation: Bitcoin Halving: Explained
For more expert insights and the latest market action, click Here to watch the full episode of Market Domination.
This post was written by Luke Carberry Mogan.
Video transcription
JULIE HYMAN: The long-awaited or at least long-discussed Bitcoin halving is expected to happen over the weekend. And it will be the amount of new Bitcoins available on a daily basis. This is bad news for cryptocurrency miners. What does this mean for investors? We’re trying to figure out how to navigate the big picture with the Yahoo Finance playbook.
We’re joined by Matt Ballensweig, Head of Go Network at BitGo, and Alex Felix CoinFund, Co-Founder and CEO. Guys, thanks so much for being here. We appreciate it. So, I guess, first of all, we have to ask ourselves what will happen to the price.
Because in past halvings we have seen the price increase successively. But the market seems a little bigger now, in part, thanks to ETFs. I don’t know if the dynamics are different. Alex, I’ll start with what you think.
ALEX FELIX: Great. Thanks for having me, Julie. Everyone should own Bitcoin. It is the best performing asset of all time, with an annualized return of 153% from 2011 to 2024. Runners-up such as the NASDAQ, US Growth and even the S&P have not been able to keep up with the returns that we have seen. And despite four declines of more than 75% since 2011, it’s still alpha for portfolios.
In terms of where we are headed here, if you look at past cycle highs, we tend to see explosive growth as we move through the previous all-time high. The latest high suggested a move of around 250%. And so that puts us in the 240k range from here. So, I think 150 to 200,000 could be achievable in the next year or two. But it is difficult to establish an exact time frame.
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– You know, Matt, I’m thinking more broadly about the cryptocurrency market right now as a news event like the halving approaches. I’m just curious what you think about Bitcoin’s position within the overall trade. Will we have an altcoin summer again? Where are we with…
Ether, we haven’t talked much about Ether in the last couple of months with this Bitcoin run to record highs. So we’ll get through this weekend. But where are the vibes, I guess we’ll say today, in terms of cryptocurrency trading?
MATT BALLENSWEIG: Definitely. And thank you so much for having me. I think from a trading perspective, you have to think about this in two different unique lenses. One, short term and one long term. It is much easier to see it straight ahead using a long-term lens.
But if you’re a trader and you’re in the industry, and you have to think about this short term, I think the way to position yourself to think about this is number one, as usually in the short term, this is really a non-event. If you look at how Bitcoin performed in the month following each halving through 2012, in 2012, it only performed positively by 9% in the month following the halving.
In 2016 it was down 10%. And in 2020 it was more than 6%. So this may prove to be a short-term burger nothing here. There are only 450 delta Bitcoins that will no longer be in the order book on the supply side. This is the difference between what miners can sell tomorrow versus today.
And that alone on a daily basis will not move the price. That said, in the long run, the 450 Bitcoins per day add up. This is over 12 billion less net supply.
And you combine that with the $12 billion in net new demand that we’ve seen from institutions getting into new ETFs. And I think longer term you’ll start to see some pretty significant movement in BTC and the market overall. If you look at Bitcoin’s performance the year after the halving, it was plus 8,000% in 2012, plus 285% in 2016, and plus 550% in 2020. So I think in the long term here, we could be in for a good outcome. move.
JULIE HYMAN: OK, guys. So if we accept the thesis that it will increase in the long term, the question then becomes: how do we benefit from it? Do you buy underlying Bitcoin? If you can, do you buy it through these new ETFs? Do you avoid miners like the plague? Because perhaps they are seen as disadvantaged by this. Matt, I’ll tell you about this first.
MATT BALLENSWEIG: Definitely. I think if you’re trying to trade smaller stocks, it’s just a more complicated version of spot BTC. They are basically derivatives of Bitcoin. But there are also risks that are idiosyncratic to each of these companies uniquely.
So unless you’re an analyst willing to go down a rabbit hole to look at and analyze each of these smaller stocks, I’d stick to the basics here. I think one way to trade that is to have a part in the game. You have to be a long-term bull on Bitcoin. You have to have conviction and own the asset spot. So start by simply being long BTC.
If you’re looking to hedge some of the short-term volatility and cut what might come after this might be an immediate news selling event, what you can do is basically try to sell some BTC calls, maybe not too far out of the money. So something like a June 80,000 BTC call to generate some yield. That could be a 5% return depending on the strike and expiration, or about 24% annualized to June.
And then you could use some of that premium to also make long calls on ETH or other tail alts like Solana and even further down the rabbit hole to take advantage of a big move higher potentially later after the halving is in the rear view. So, this is a business idea. But there are many out there.
– Yes, and Alex, I’m curious as to your thoughts on what your preference is when it comes to vehicles, setups, etc. as well, as we’ll get to know you both through this event. But once again, in this case, this is the fourth bull market for cryptocurrencies. How do you see things?
ALEX FELIX: I agree with Matt. Do you want to belong to the spot resource. And now you can trade it with many different instruments. We have ECM options and soon we will have ETF options. And your short interest can be built there.
But we generally have a saying about cryptocurrencies. Not your keys, not your coins. People have lost a lot of Bitcoin over the years. So you always have to be careful.
But it’s really happening here. it’s the least interesting thing going on in the cryptocurrency world right now. It’s a great opportunity for us to talk about Bitcoin, thank Satoshi for creating the first blockchain and solving the double spending problem.
But what’s on the horizon is that this is the first all-time high where we’ve had regulatory clarity and institutionalization on the major cryptocurrency asset and its first blockchain, which is the cryptocurrency, which is Bitcoin. But this is just one use case. However, the non-sovereign collateral, digital money, wants to frame the use case around Bitcoin.
And there’s so much innovation going on on the tracks of blockchain that this is really the first asset that people own. And they’re likely to look for higher growth, higher potential in other subsectors of applications and protocols that are being built to serve other use cases. For example, stablecoins, which are digital cash, now produce 30% more fees than Bitcoin transactions.
So we have seen the used case of simply moving the digital Fiat onto crypto rails. We have a lot of innovation in gaming, financial markets, artificial intelligence, and many other subsectors that are just starting to adopt blockchain rails. And I think when we start to see the fangs emerge, everything outside of Bitcoin Ethereum and Coinbase is less than six years old. And Bitcoin is leading the way here. We will likely see many more great opportunities to allocate more into different pockets of the crypto universe.
– Yes, everything is fine. Great. We’ll leave it there. Matt, Alex, thanks for your time and have a great weekend.