Ben Simpson explains the Bitcoin halving (scheduled around April 27, 2024), how it reduces miner rewards and new supply (from 6.25 BTC to 3.125 BTC), why that scarcity can push price higher, and how macro factors—liquidity, central bank balance sheets, M2, and interest rates—interact with halving cycles to influence bull markets. He cites historical post-halving gains and advises long-term holders to stay patient through bear markets.
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Bitcoin ETFs in the market, there is nearly $30 trillion of advised wealth. $30 trillion number is just the assets under management in wealth accounts. It's not actually money. Bitcoin is going to hit $1 million. The likes of Bitcoin E, there's going to be a lot of buying of Bitcoin, etc. Let's go straight actually to the halving. There's a halving event to come. Bitcoin halving coming up next year around April 27th, around roughly that date. Debt refi cycle every three and a half years to four years. That happens. That's what I'm concerned about. It's complete consensus.
Look, it's not that simple. Let me try and explain using one word, consequences. To better understand the consequences, we first have to understand the process. So let's get into it. Imagine yourself working in a day job. Day after day slaving over your job, but every four years your salary gets cut in half. The bitcoin halving event is when the mining rewards for bitcoin halves every four years. It basically means the amount of new bitcoin that comes into circulation each day. Halves. This means it reduces the supply that comes into circulation for Bitcoin, making Bitcoin less and less viable to access. This is one of the amazing things about Bitcoin. Instead of like normal currency where the money inflates because the US government and other countries around the world print more cash, Bitcoin does the opposite. And this is what makes Bitcoin so exciting. Instead of an increasing supply, the bitcoin supply reduces, making it even harder to access. And basic supply and demand tactics show us that as supply decreases and demand increases, you get an upwards trajectory on the price. Well, how does this even work? Well, the way bitcoin works is you have Bitcoin miners validating transactions on the blockchain. That's what makes the bitcoin blockchain tick. Miners then get rewarded in bitcoin to verify those transactions. This is the issuance rate and it's hard coded in the bitcoin blockchain. Right now, bitcoin miners are getting 6.25 Bitcoin as a reward for mining bitcoin. Moving forward, it's going to go to 3.125, halving the new supply of bitcoin. And this is why I love bitcoin because it is deflationary. It'll take about 100 years for the supply to actually reach 21 million. As you can imagine, every four years, the amount of bitcoin coming into circulation halves. So you go from 6.25 to 3.125 to 1.575, I think it is. And you can just halve all the way down. So you can, as you see this chart here, it really gets to a flat line measure. And that compared to fiat currency, is the complete opposite. So this, my friends, is why the bitcoin halving event is so important. Because it has a supply shock on the amount of bitcoin available. As we know, about 14.5 million bitcoin right now is held by bitcoin holders that haven't sold in over a year already. A large percentage of the bitcoin available to buy is not available to buy. So as you reduce supply and people want to come and buy more bitcoin, it's a very illiquid market. And this is what pushes the price of bitcoin up so fast, so quickly, usually around the halving cycle. It's because you get this new sentiment, this new narrative of new retail investors coming into the space, wanting to accumulate bitcoin. But there's only a limited number. There's only very, very, very few assets in the world that are as scarce as bitcoin. Gold is one of them. But arguably you can still go out and try and find more gold. There is not an absolute, absolute limited source of that. People are still mining gold today with bitcoin. It's hard coded into the blockchain that there will only be 21 million. And this, my friends, is why bitcoin is so valuable. Now, as you can see on this chart here, this is a really cool chart. It shows us the increase of price of bitcoin after each halving. If you look back in the first Bitcoin halving in 2013, Bitcoin increased 80x over 8,000% in the year following that halving. In the 2017 halving, it went up 284. And the most recent halving in 2021, it went up 5,38. Now, history doesn't rhyme, but it does repeat. And bitcoin and the four year super cycle chart is one of the only few charts that continue to repeat every four years. It's also really important to understand that the bitcoin halving chart and the four year cycle gives us a good indication of when bull markets can come back. But it's not an exact indicator. There's always been other factors that have come together to create bull markets, specifically around increased liquidity and lowest interest rates. If you look at the M2 money supply, which is basically the amount of money that comes into circulation through quantitative easing. This is when governments basically money into the economy. It's directly correlated with the amount of price increase of bitcoin. So one of the things potentially holding us back from increasing straight away at the halving next year is the increase of liquidity. Right now there is no quantitative easing going on and rates are still high, making it more expensive for access to capital, which is making risk on assets like bitcoin a little bit more problematic to grow in capital and size. As you can see on this chart here, this is showing us the bitcoin and central bank balance sheets. Basically showing you when the central bank creates more money, bitcoin price increases. It's directly correlated. So next year if we get the halving and we start to see banks start to print more money, which is highly likely at this point in time with everything that's going on in the world, I do expect a bitcoin bull market to return. Lastly, one of the most important things to remember in any four year super cycle is to respect the halving date. I see so many people getting impatient during these long drawn out bear markets. They think too short term, they sell it off because they haven't made a million dollars overnight. But if you look at the data, the year following the halving event is the most critical and is the most groundbreaking in terms of your ability to make money in a bull market. So if you're sticking in there and you're holding on, wait to this halving event. Honestly, this is when money is made. I see too many people trying to make money in bear markets. They don't and they get impatient and they get frantic and they sell. Be patient. Hold to this next halving and see what happens the 12 months following. You should now better understand the bitcoin halving cycle and its impact on price. If we see this halving cycle line up with increased liquidity and maybe even a bitcoin spot etf, Fingers crossed, we should see a bull market return. Please imp with your own portfolio. Stay patient and wait for those dates to come next year. Hopefully you've enjoyed this video. If you'd love to look at some of my other videos, check out my channel. I'm here to educate you and give you all my learnings and teachings over the last seven years so you can win in crypto yourself. Thanks so much. My name's Ben and I'll see you on the next episode.
