The Bitcoin halving, a scheduled event occurring roughly every four years, has garnered significant attention from investors and analysts alike, as its fourth event happened on Friday. Bitwise Chief Investment Officer Matt Hougan stated his thoughts on the matter in a series of posts on X, and during an interview with CNBC.
Historical Trends and Market Expectations
According to Bitwise CIO Matt Hougan, the Bitcoin halving presents a “buy the news” opportunity for investors. Drawing from historical data, Hougan suggests that while immediate price action post-halving may be relatively muted, the long-term outlook remains bullish. He notes that after each of the past three halvings, bitcoin prices have rallied substantially, indicating the potential for a similar trend this time around.
He stated:
“If you look historically at halvings, the price action within a week or two after the Bitcoin halving is relatively muted. But if you look out at a year, BTC prices have rallied substantially after each of the past three halvings and I think it will do so again.”
Hougan emphasizes the significance of the halving in reducing the supply of new bitcoin, stating, “The amount of new supply of Bitcoin coming into the market is being cut in half. We’re removing $11 billion of annual supply. I think big picture, that has to be good for price and that’s what I would expect over the next year.” This reduction in supply, coupled with increasing demand through spot Bitcoin ETFs, could drive prices higher in the coming months.
He noted:
“That’s why I find the halving bullish […] I think the market has underestimated the long-term demand for bitcoin, and I like the idea of that excess demand having to chase bitcoin almost exclusively from people who don’t need to sell.”
The Bitcoin halving event, designed to reduce the supply of new bitcoin entering circulation, is often seen as a pivotal moment in the bitcoin market. Notably, the 4th halving event went through on Friday, effectively cutting new bitcoin awarded per block from 6.25 BTC to 3.125 BTC.
Matt Hougan Talks About Efficient Markets Hypothesis
Despite these views, some are convinced that the halving is already “priced in”. Analysts seems to be divided on this, as not everyone thinks this way. Hougan raises doubts about whether current prices accurately reflect future demand for bitcoin. He argues that while the halving itself is well-known and accounted for, market participants may not have fully anticipated the potential increase in demand post-halving.
Hougan challenges the Efficient Markets Hypothesis (EMH), which suggests that asset prices reflect all available information. He points out that while the EMH accounts for anticipated supply cuts from the halving, it may overlook unexpected shifts in market demand. “The halving is well known, so today’s price reflects that it will occur… [but] What if future demand for bitcoin is higher than the market currently anticipates?” he asks.
Hougan wrote:
“I think this is broadly true […] What the EMH folks leave out, however, is that… current prices only reflect the market’s best guess of future demand for bitcoin.”
Forced vs. Willing Sellers
One factor contributing to uncertainty surrounding post-halving market dynamics is the balance between “forced” and “willing” sellers in the Bitcoin ecosystem. Before the halving, miners—who face high operational costs—are the primary “forced sellers” of bitcoin. However, after the halving, their share of daily sell pressure is expected to decrease significantly.
This shift could result in a greater proportion of “willing sellers,” who are typically long-term holders of bitcoin. According to Hougan, this dynamic could create “significant upward price pressure” if market demand exceeds expectations.
Conclusion
As the Bitcoin community watches closely for price changes after the 4th halving, experts remain divided on its potential impact on prices and market dynamics. While some believe that the halving has been fully priced in and anticipate a sideways trend, others caution that the market may not have adequately accounted for future demand. Regardless, the Bitcoin halving continues to be a significant event in the Bitcoin world, with the potential to shape market trends for years to come.
