The
fear of missing out (FOMO) has been a contributing factor in leading people to
invest or hodl Bitcoin. This phenomenon is likely to continue now that we are
roughly 12 months away from the third halving event in the history of Bitcoin
(BTC).
The
co-founder of Morgan Creek Digital, Anthony Pompliano, even compares the
Bitcoin FOMO after halving to the one that would engulf the market if such an
event would affect the daily printing of US dollars.
Bankers Would Be FOMOing
In
a tweet, Pompliano says:
“Imagine if the daily printing of US dollars was suddenly cut in half forever. Bankers would be FOMOing even though USD isn’t a scarce asset. Now imagine what they’re going to do when the daily Bitcoin supply is cut in half for one of the scarcest assets in the world. I can’t wait,”
If you are not in the loop, the halving event takes place after every 210,000 blocks have been added to the Bitcoin blockchain. With halving, the custodians of the Bitcoin blockchain, miners, will earn 50 percent less for each block mined; from 12.5 BTC to 6.25 BTC.
But there’s more to halving. Bitcoin’s inflation rate will reduce from 3.82 percent to 1.8 percent. Additionally, the number of Bitcoins being produced each day will be cut by half; from 1,800 to 900. Surprisingly, the inflation rate for Bitcoin, after halving, will be below that of the US economy, which the Fed has set at 2 percent. With such a low annual inflation rate, Bitcoin follows gold’s footstep in becoming a store of value.
What Happened
During Previous Halving Events?
Borrowing
some notes from the previous two halving events, the price of Bitcoin will be
the biggest beneficiary of the event. For example, when the first halving event
occurred in 2012, the price of Bitcoin jumped to a price never seen before-
$1,000. After the second event happened in 2016, BTC touched a high of $20,000
the following year.
In
a tweet,
Trezor, a leading manufacturer of cold wallets, said:
“In exactly 365 days we will experience the third Bitcoin halving in history. This event marks a 50% decrease of block rewards, lowering the total supply of Bitcoins mined from one block to only 6.25 BTC. How will you celebrate this event?”
Brian
Kelly, CEO, BKCM LLC, a crypto investment firm, noted:
“You generally have a rally a year into it, and a year out of it. And we’re just at the beginning of that stage.”
Rally, Greed, FOMO
It is this projected rally that many, including bankers, will not want to be left behind and will scramble to touch Bitcoin from any corner possible. Unfortunately, not all have Pompliano’s back on an imminent Bitcoin FOMO after the 2020 halving.
For
instance, Ben DiFrancesco, while replying to Pomp’s tweet, argued:
“So, these same bankers, who don’t know literally the most basic facts about how Bitcoin works, are going to FOMO into BTC in 1 year on the day of the halvening (halving)? Not trying to be a smart a** – I’m genuinely trying to understand what the thesis is here.”
In
reply, Pomp said:
“Yes. Greed is a powerful, powerful thing.”
