Waiting for a Bitcoin halving that would cause its growth? Here’s what you might be forgetting about

A lot of Bitcoin price models are built on the factor of the Bitcoin halving effect. If you look at the Bitcoin halving chart, it has always (without exception) caused a rally in the cryptocurrency market with the establishment of a new historical ATH. There are also a lot of incredibly optimistic predictions associated with waiting for a new halving in 2024. 

In this article, we will look at this phenomenon more soberly, explaining the existence of anti-halving, the impact of which the market rarely considers. This is a kind of black swan that often breaks logical price-prediction models. 

 

How halving works

Speaking enthusiastically about the impact of halving, we need to understand that the impact of halving on the BTC emission is gradually decreasing. Before the first halving in 2012, only 50% of all bitcoins were mined, with another 25% mined between the first and second halving. By the fourth halving in 2024, 93% of all BTC will be mined. 

After that, the daily emission will drop to 450 BTC, and just over 3% of bitcoins will be mined over the next four years. In four years, from 2024 to 2028, only 656,250 BTC are scheduled to be mined, that is just over 164,000 BTC per year. The reduced emission rate not only almost nullifies the impact of miners on the Bitcoin market, but also reduces the impact of issuing new coins many times over. 

It turns out that the influence of halving gradually decreases, but the influence of what is called anti-halving, on the contrary, begins to play an increasing role.

What is anti-halving?

If halving reduces the rate of BTC emission and thereby leads to a decrease in market supply, there are opposite events, leading to the outburst of large amounts of BTC on the market. They can be conventionally called “anti-halving” (although they have nothing to do with mining and new Bitcoin emission in general, the name was invented by journalists to explain the effect of reverse halving). 

Over Bitcoin’s long history, large amounts of Bitcoin have been accumulated and isolated many times. They could potentially come back and cause a temporary storm in the market, accompanied by a price collapse. The existence of such huge sums has long been known, but almost no one takes their potential appearance on the market into account in their pricing models. Meanwhile, the sudden release of a massive amount of bitcoins could be similar in its effect to the collapse of FTX.

How many bitcoins could come back to the market?

Let’s list the most significant events that could bring Bitcoin amounts comparable to a year’s worth of its planned market emission. Especially since some of these events have already been announced (without a specific date): 

• Taking control of BTC-e wallets. The large BTC-e exchange was shut down by U.S. intelligence agencies in 2017. Despite rumors and investigations, there is still no reliable information about who controls its backup wallets. They could hold hundreds of thousands of BTC. Taking into account the recent unexpected movement of money on one of the wallets of this dead exchange, restoring access to BTC-e wallets could be a “black swan” for BTC price. Even if such amounts are sold anonymously and cautiously, a Bitcoin price dump is possible.
• Payouts to MtGOX users. Former MtGOX customers have been waiting almost nine years for their money back. After all manipulations with MtGOX debts on the accounts of the temporary manager, a little more than half of 200,000 BTC is left. But even this amount in the case of a one-time sale on the open market will cause a price collapse. So far, they say that payments are about to begin in 2023 (before that, they were already postponed several times). In this case, the equivalent of four to five months emission of BTC will come to the market, which will cancel the effect of almost a year of halving.
• Return of stolen bitcoins from Bitfinex. About 119,600 BTC were stolen from the Bitfinex exchange in 2016. Some of the stolen money has already been withdrawn by hackers, but most of it is still under their control. If the hackers’ wallets are seized, they will probably be returned to verified exchange users or auctioned off. This event would at least cause a market dump. The amount of BTC still not returned to the market is comparable to the amount left in the MtGOX liquidator accounts.
• Microstrategy bankruptcy. Financial services and trading software developer – Microstrategy – is now the largest Bitcoin holder among U.S. public companies. As of the fall of 2022, it owned 129,700 BTC. In case of severe financial trouble, all of those bitcoins would be sold. Even according to current data, Microstrategy’s reserves are about 80% of its annual total BTC emissions after halving.
• WBTC shutdown. “Wrapped bitcoins” or WBTC are tokens on the Ethereum blockchain used in DeFi and traded on centralized and decentralized exchanges (we wrote about them here). They are fully backed by bitcoins, frozen in a smart contract. As of December 25, 2022, there are 184,505 BTC in that contract. And that’s already more than a year’s worth of emission after halving. If the WBTC smart contract is closed for any reason, actual bitcoins will enter the market.
• Grayscale GBTC fund closing. There are simply enormous sums in the reserves of cryptocurrency trust funds. The largest of these is GBTC, launched by Grayscale Investments back in 2013. GBTC shares are now trading almost a third cheaper than the value of the bitcoins that back them up. And that means investors are questioning the fund’s future. As of December 2022, GBTC has more than 635,000 BTC on its balance sheet. And that’s almost equal to the amount of BTC emission in the four years since halving!
• The return of Satoshi Nakamoto. The creator of Bitcoin is still the most significant single holder of the first cryptocurrency. In the case of Satoshi’s return to the market, this would be the largest anti-halving. He is credited with owning about 1.1 million BTC.