A Monumental Shift: What Happened During the Third Halving?

As you learn about Bitcoin, almost always, the first thing that catches your attention is the price. You think to yourself, "If only I had heard about Bitcoin in 2010!" It is natural for people to feel the FOMO and think that they have missed the sailing ship.

(This may be the case for the slew of unregistered securities that play in the digital realm, waiting to dump their tokens on the unsuspecting public just to realize their own gains.) But I digress...

With the huge news of the SEC officially filing suit against both Binance and Coinbase, it may seem difficult for people to know what to trust. What digital asset is not looking to scam me?

BitByte and so many other dedicated individuals, publications, and organizations have been singing from the mountaintop about the one asset that is free from corruption, decentralized worldwide, and derives its value from real-world work, generated through watts of power. A true technological marvel. A connection from the real world to the digital. Bitcoin... the answer is Bitcoin.

So if Bitcoin is the only digital asset that deserves your attention, isn't it too late to see any real generational gains?

The Rational Root presented at the Bitcoin Conference this year, and what had to say was incredibly intriguing. He argued that we are likely to see increasing gains in Bitcoin's price growth because of what happened during the Third Halving.

Let's work our way through this idea. Chart time.

Supply Issuance and HODL Waves

First, any Bitcoiner should recognize this ever-flattening-out chart. This model represents the supply issuance of new Bitcoin being rewarded into circulation. As the halving events occur, the mining reward is split in half, resulting in a slowly decreasing issuance rate which will end in the year 2140.

As less and less Bitcoin is being added into circulation, the relationship to the rate at which long-term holders are keeping their Bitcoin stashed away only keeps increasing...

Unchained Capital's HODL Waves are a great visual representation of this fact. The percentage of individuals who have been holding their Bitcoin for at least 2 years time is now over 54%.

Let's regroup real quick. If the amount of liquid supply of Bitcoin being made available is decreasing due to halving events, and the amount of Bitcoin that is categorized as being held long term is increasing, well, we have ourselves a little supply and demand conundrum.

Price is a function of supply and demand.

With less and less Bitcoin being available as we move forward, it is not out of the realm of possibility to assume that Bitcoin's price will increase not only at an increasing rate but compared to USD, grow in value forever. But that specific point is a longer discussion for another time...

The Smartest Carrot In the Room

The Rational Root laid out a very thoughtful case as to why he believes that we may very well see a divergence from the previous diminishing returns that Bitcoin has traditionally been seeing. At the third halving event, there was finally an inflection point. The amount of available Bitcoin began trending downward for the first time in relation to the amount of illiquid Bitcoin, as more and more people continue to hold the hardest money for the long term.

If you have the time, I would recommend you watch his presentation on the Enterprise Stage from this year's Bitcoin Conference 2023.

So many people do feel that FOMO, and think they are too late. But, if Rational Root is correct, then it is possible that there are more gains ahead of us in the future than have already come before us. The future looks bright to me.