Co-founder and Managing Partner at Multicoin Capital, Kyle Samani, recently took to Twitter to express his thoughts on the upcoming Bitcoin halvening event, scheduled to occur sometime in May this year. According to Samani, most of the discussion around the ‘Efficient Market Hypothesis’ with regard to the Bitcoin halvening event is “academic nonsense,” adding that what matters is whether the price will go up or down.
“In other words, are there more dollars crossing the spread to sell or to buy?”
Samani also said that there will probably be “lots of volatility +/- 60 days” from the halvening event. However, he conceded that he is unable to provide more clarity on that front. He also said that “[they] have good reason to believe there will be fewer dollars across the spread to sell” after the event.
“Therefore, for every dollar of marginal demand post-halvening, that dollar pushes the price up further than pre-halvening, because there is less selling pressure.”
The Multicoin Capital co-founder noted, however, that his logic will be incorrect if, post-halvening, the new net dollars for BTC fall by more than 50%. He also pointed out that the ‘Efficient Market Hypothesis’ says BTC‘s price would be bid up in advance, such that the amount of net new capital would fall by around 50%. “However, we have no reason to believe this,” Samani accepted.
Samani’s reasoning is that as structural limitations to the inflow of capital into Bitcoin get lifted, more new capital would be able to flow in. Samani also said that those buyers will not be valuation sensitive and will not care what the price of Bitcoin is when they finally buy because it is not in their mandate.
“Their mandate is to be long some asset class. eg 60% equities, 40% bonds. Note that a mandate like this holds true irrespective of the current price. That is *the point* of the mandate.”
Further, Samani also spoke about how institutions operating on “decade+ time scales” maintain mandates like these because they realize they cannot time the market cycles. This is why they don’t even try, he said.
“This is also why the S&P was up 30% in 2019… after a 10 year bull run.”
Using three points — it is becoming easier for big capital to enter, big capital will not care about the price of Bitcoin at the time of entry, and that the issuance is being cut in half — Samani claimed that the halvening is “objectively bullish.”
“Halvening is mega bullish for BTC in the medium to long term Leading into, and coming out of, the halvening…. expect some vol :)”
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