Investors & Friends,
I wanted to get a post out to you today on the halving, which is expected to happen next Monday. Our friend Pomp wrote an excellent piece today that is shared below and will save some time.
For investors, we have some exciting performance stats to announce to you soon.
Hope you all have a great weekend!
Coyn & Team
Anthony Pompliano Newsletter, May 8
We are about 4 days away from the third Bitcoin halving. This event has historically served as a significant price catalyst, so I wanted to take a few minutes to explain a few interesting points.
First, what is the Bitcoin halving?
The Bitcoin network is designed to create only 21 million Bitcoin ever. That total supply can’t be changed. A pre-determined amount of Bitcoin is “released” into the circulating supply approximately every 10 minutes. This mechanism is known as the “Bitcoin reward” and it given to the miners who are using their computing power to run the network.
The Bitcoin reward started out at 50 Bitcoin per 10 minutes. After 4 years, the reward was cut from 50 to 25 Bitcoin in the first halving. Another 4 years went by and the reward was then cut to 12.5 Bitcoin. We will see the third halving take place this coming Tuesday morning Eastern Time. The Bitcoin reward will drop to 6.25 Bitcoin.
Before we look forward to what is likely to occur, I want to take a look backwards of what has happened since the last Bitcoin halving.
The 7-day average Bitcoin hash rate was 1.52 TH/s in July 2016. Today it is 118.88 TH/s, which represents more than a 78x increase in hash rate since the last halving.
Miner revenue was just over $1.2 million per day in July 2016 and it now sits at $18.25 million. This is a 15x increase over the last 4 years.
The market price for 1 Bitcoin in July 2016 was around $670. Today it is trading around $10,000. This is a 14.9x increase in the last 4 years.
The market capitalization of Bitcoin was $10.6 billion in July 2016 and it is now over $165 billion. This is more than a 15x increase in the last 4 years.
The daily global exchange traded volume in July 2016 was $2.4 million. Today it is approximately $185 million. This is a 77x increase in 4 years.
There were approximately 7.85 million Blockchain.com unique wallets (not total globally, but only one company) in July 2016. There are now 48.5 million unique wallets on the same platform. This is more than a 6x increase.
It is undeniable that Bitcoin’s network has become much stronger, more people are participating in the alternative financial system, and the market has determined that Bitcoin is much more valuable today than it previously was. Some of this is driven by changes in the macro economic environment. Some of it is driven by time passing. Some of it by greater awareness and education materials available. And some of it by improved infrastructure that makes it easier and safer to convert fiat dollars into decentralized, digital money.
Regardless of the reason, the market is bigger and stronger. The macro environment is pushing more people to look at Bitcoin as an alternative store of value.
Which brings us to what is likely to happen in the next 18-24 months.
There is no reason to believe that we will see any change to the trends that we have seen as each prior halving. My expectation is that there will be more hash rate, higher miner revenue/market price/market capitalization, and more unique wallets in the future. The fixed total supply of 21 million Bitcoin won’t change either.
This is a simple supply and demand situation. If total supply doesn’t change and incoming daily supply drops 50%, while demand stays constant or increases, the USD price has to go up. If it didn’t, supply and demand economics would be invalidated.
This is why I am so bullish on Bitcoin. Every data point highlights a high probability that the world will deem Bitcoin more important/valuable in the future than it does today. There is always a chance that I am wrong. No one is right 100% of the time. But this is a relatively low-risk investment in my opinion, which is also more attractive when you layer in the fact that the upside potential is so asymmetric.
We are currently in an economic crisis and Bitcoin is outperforming every other asset class. It is up almost 40% year-to-date. Bitcoin has served as the single best store-of-value or chaos hedge in the financial system. But you don’t have to believe me about the future outlook.
Paul Tudor Jones, the legendary hedge fund manager, disclosed yesterday that he is gaining exposure to Bitcoin. He specifically stated “The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.” Yes, you read that right. One of the most well respected investors on Wall Street has finally seen the light. He is gaining exposure to Bitcoin as a hedge against the coming inflation.
Four years ago this was unfathomable. We have made great progress in that time as a network and community. Now there are a few more big dogs sitting around the table as we go into the third Bitcoin halving. What a time to be alive.