In less than six months\u2019 time, Bitcoin will see an extremely important event. Known as a “halving” or “halvening” \u2014 depending on who you ask \u2014 the number of BTC issued per block (every 10 minutes or so) will get cut in half from 12.5 to 6.25, effectively meaning that BTC\u2019s inflation rate will be cut in half.<\/p>\n
While some are skeptical of the event\u2019s effects on the BTC market, a leading investor and entrepreneur in the cryptocurrency industry \u2014 one with roots in financial markets and derivatives \u2014 has asserted that there is no way that the halving is priced in.<\/p>\n
Over the past few weeks, a debate has erupted regarding Bitcoin’s impending halving, slated to take place in May 2020. It isn’t clear how this latest discussion started \u2014 some look to Bloomberg editor Joe Weisenthal, somewhat of a BTC skeptic<\/a> \u2014 though it has become Crypto Twitter’s most favorite thing to talk about.<\/p>\n The discussion reached a head just earlier this week when Melem Demirors<\/a> of CoinShares, a foremost cryptocurrency investment\/research firm, released a six-part thread on the halving. She argued in this thread that due to the rise of Bitcoin and cryptocurrency derivatives, which decouples these assets from their inherent value and supply-demand economics, “there is a very real possibility the price of bitcoin does not go up after halving.”<\/p>\n Jack Mallers, a Bitcoin developer (currently working for Lightning Network upstart Zap) whose dad and granddad worked in the derivatives industry, begged to differ, releasing a multi-part Twitter thread on why he doesn’t think Demirors’ thesis is based in reality.<\/p>\n Mallers admitted that derivatives “do help market efficiency and general price discovery,” though asserted that such financial instruments do not affect simple supply-demand dynamics as Demirors thinks they do.<\/p>\n He elaborated that derivatives traders never set the price, the supply and demand dynamics do, meaning that “it’s impossible to predict where demand will meet the new-found supply” when a supply shock (like the halving) takes place.<\/p>\n 1\/ @Melt_Dem<\/a>, I respectfully disagree. This is incorrect.<\/p>\n Yes, derivatives do help market efficiency and general price discovery.<\/p>\n However, no, of course they do not affect basic supply and demand. https:\/\/t.co\/cQvxHWCjJU<\/a><\/p>\n — Jack Mallers (@jackmallers) December 25, 2019<\/a><\/p><\/blockquote>\nRelated Reading: Why Did Youtube Crack Down on Crypto Channels? Lawyer Weighs In<\/a><\/h6>\n
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