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Pantera Capital: Bitcoin may reach its peak in August this year

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Pantera Capital predicts that if the history of the halving effect repeats itself, Bitcoin may reach a price peak of $115,212 in August this year.

Original title: "Pantera: Why we believe Bitcoin will hit $115,000 in August"

Original compilation: Lianwen

< p>We covered the Bitcoin halving in depth in our May Email to Investors topic, when Bitcoin’s block reward had just been halved. At the time, we wrote:

“Bitcoin price action has been largely flat over the past two weeks, with some commenting that the Bitcoin block reward halving has Happened, but did not make money from it. Therefore, we emphasize that the Bitcoin block reward halving is a big event, and its impact may take years to show. Generally speaking, the block reward before the block reward is halved. In 1.3 years, the market may be underestimated. On average, the peak time of the market may be about 1.2 years after the halving of block rewards. Such a complete cycle may take about two and a half years.”

Now, the "halving" effect is happening - exactly as we predicted.

Pantera: Why We Believe Bitcoin Will Hit $115k in August

Long story short,

"Less "Halving" can have a huge impact-however, it often takes a year or two to see what impact the halving has on the entire market.

In the letter to investors in April last year, we gave some predictions, and now it seems that those predictions are basically in line with the actual situation. Our analysis is based on comparing the supply/flow reduction trend of Bitcoin relative to the circulating supply, once every time the block reward halving occurs, and also evaluates the subsequent impact of the halving on the price of Bitcoin (see below with a full analysis).

In our investor letter published last April, we predicted that if Bitcoin experienced a historic "stock-to-flow" impact, then Each month, Bitcoin price bounces along the following path:

Pantera: Why We Believe Bitcoin Will Hit $115k in August

Although it has been a few months Slowly changing, but the current price movement of Bitcoin is basically in line with expectations. So the question is: Will Bitcoin hit $115,212 by August 1, 2021?

Whether Bitcoin will reach $115,212 on August 1, 2021, I am not saying that I will bet my entire fortune on this matter , but I think it's really possible and we're headed in the right direction.

—January 8, 2021, Pantera Capital Co-Chief Investment Officer and CEO Dan Morehead in an interview with Fox Business

When everyone is asking if the Bitcoin "halving" effect is fully priced in at the current price, I remind them to remember the May 2020 investor call , a wonderful response from Jesse Powell, CEO of cryptocurrency exchange Kraken:

Question: Is the Bitcoin halving effect already reflected in the price?

Answer: I don't think Bitcoin will set its own price.

— Jesse Powell, Bitcoin Halving Conference Call, May 12 2020

At least from At present, the price of Bitcoin does not seem to reflect the imbalance between supply and demand. Currently we are still below the 10-year exponential compound return trendline, and the current Bitcoin price is lower than our previous forecast. The Fed is printing money like crazy, and Morgan Stanley bought a 10% stake in business intelligence software giant MicroStrategy. It feels like the halving effect is not fully reflected in the Bitcoin price.

Bitcoin halving background

Bitcoin protocol currency The supply function is exactly the opposite of quantitative easing. Right now, 6.25 bitcoins are minted approximately every 10 minutes. On Bitcoin, we don't see "Greenspan put." Investors have a risk aversion mentality and hinder the growth of the US economy.) Now, for Bitcoin, there is one thing that cannot be shaken: 6.25 Bitcoins are produced every 10 minutes.

Bitcoin block rewards are halved every four years—until 2140, when all 21 million bitcoins are mined.

< p>Bitcoin supply and token distribution rules are based entirely on mathematical principles, designed to be transparent and predictable.

“The total supply of Bitcoin is 21 million When the block is generated, the Bitcoin will be distributed to the network nodes, and the Bitcoin block reward will be reduced by one side every four years. The first four years is 10,500,000; the second four years is 5,250,000; the third four years is 5,250,000 2,625,000 for the first year; 1,313,500 for the fourth four years..."

— Satoshi Nakamoto, Crypto Mailing List, Jan 8, 2009.

Price Impact of Bitcoin Halving

Bitcoin Blocks When the reward is halved, the currency price will soar. As we described in our recent investor letter, it makes sense for a halving event to have an impact on the price of Bitcoin, because if the supply is cut in half (especially if there is a surge in demand in the market), there will be supply If there is a shortage of supply, the price is bound to rise sharply, so as to stimulate those who hold Bitcoin to sell.

The chart below shows the price trend of Bitcoin before and after the previous three Bitcoin block reward halvings.

According to historical data, before the halving, the average time for the price of Bitcoin to bottom out is 459 days, and then the price will gradually rise until the halving is approaching, Then skyrocket. The average time between the halving and the bull market is about 446 days.

In this cycle, the time before the halving of the market will actually reach 514 days. We estimate and make a judgment according to this range: if History repeats itself, and the price of Bitcoin will peak in August 2021.

Pantera: Why We Believe Bitcoin Will Hit $115k in August

STOCK-TO-FLOW model prediction

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We study and analyze the framework of Bitcoin block reward halving, in fact, we study the change of "stock-to-flow" ratio for each halving, and then extend the research results to subsequent in the halving event. The first Bitcoin block reward halving, which accounted for 15% of the total supply, will have a huge impact not only on supply, but also on price.

Subsequent Bitcoin block reward halvings may have a gradually diminishing impact on price, as the supply after the last block reward halving is the same as the next The ratio of supply after the block reward is halved will continue to decrease. The graph below shows the supply before each previous Bitcoin block reward halving, and the percentage change in supply after each Bitcoin block reward halving.

Pantera: Why We Believe Bitcoin Will Hit $115k in August

The second Bitcoin block reward halving, the supply is only halved for the first time One-third, this phenomenon is very interesting, because the impact of this halving on the price increase is exactly one-third.

If we extrapolate this trend to the Bitcoin block reward halving event in 2020, then:

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This reduction in Bitcoin supply is only 40% of what it was in 2016. If this relationship holds true, it means that the price of Bitcoin will also rise by 40% - so we expect Bitcoin to reach a peak price of $115,212 in August 2021.

Pantera: Why We Believe Bitcoin Will Hit $115k in August

I realize that some people might find this price prediction ridiculous. But you know what? When we established the Bitcoin fund Pantera Bitcoin Fund, the price of Bitcoin was only $65, but at that time we boldly predicted that the price of Bitcoin would reach $5,000. As a result, many people in the market also found this prediction to be ridiculous.

Mark Twain once said: History will not repeat itself, but there are always striking similarities - we feel that the possibility of Bitcoin price rising Sex is much greater than 50%, and the range will be large.