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Why the fourth Bitcoin halving is not priced in: Analyst fights BTC FUD

  • Bitcoin price is at risk of a massive decline from short positions taken by traders, according to a crypto expert. 
  • Bitcoin Stock-to-Flow model creator Plan B weighs in on the FUD and corrects the analyst, says BTC halving is not yet priced in. 
  • Plan B argues against the “death spiral” narrative for BTC miners, throws weight behind the largest asset by market capitalization.

Bitcoin network’s fourth halving is expected to occur in March 2024, this is when block rewards will be slashed in half from 6.25 BTC to 3.125 BTC. Analysts consider the current scenario, the macroeconomic outlook, US regulators’ sale of BTC and the regulatory crackdown as the “death spiral” of Bitcoin miner profitability and BTC price. 

The creator of Bitcoin’s Stock-to-Flow model refuted the claims and argued that the fourth halving is not priced in yet. 

Also read: Layer 1 coins Ethereum, Cardano and DOT make massive moves, riding on alt season gains?

What is the Bitcoin “death spiral” narrative for miners

Crypto analysts and developers behind the Twitter handle CoinClubQuincy presented a “death spiral” narrative for Bitcoin, miner profitability and BTC price in a recent tweet. Experts based their thesis on high hash rate stressing the energy grid and negatively influencing miner profitability. 

In the long term, according to the bearish thesis, large scale miners are likely to drop off the network leaving block times to grow longer, and profitability would take another hit. Once a large percentage of miners have dropped off the BTC network, it would be vulnerable to attacks. 

At this point, traders could increase the selling pressure on the asset, opening massive short positions to push BTC price lower for increasing their profitability, alongside sale of BTC by governments and regulators. The team is likely referring to the time when a US regulator sold BTC seized during the FBI’s crackdown on the Silk Road. 

Plan B dispels the bearish thesis as FUD, what does this mean for BTC 

Plan B, popularly known as the creator of Bitcoin’s Stock-to-Flow model argues that the thesis is flawed. Miner “death spiral” is an unlikely scenario and argues that this is evidence that Bitcoin’s fourth halving is not priced in yet. 

Each Bitcoin halving has pushed the asset’s price higher, to its new all-time high. While traders would expect the “halving narrative” to be priced in by now, bearish theses that call the death spiral or the end of BTC prove that it isn’t. 

Bitcoin holders have noticed a slight retracement in BTC’s dominance and capital rotation into alternative cryptocurrencies. However, its important to note that China’s ban on Bitcoin resulted in several miners shutting down their mining operations and the hashrate simply migrated out West, with an adjustment period where mining profitability declined. 

The Bitcoin network could have suffered a “death spiral” during China’s ban on Bitcoin, however the black swan event didn’t occur, fueling a bullish sentiment among holders and supporting the thesis of Bitcoin’s resilience against such events. 

Author

Ekta Mourya

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.

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