In an exclusive interview with Kadan Stadelmann, CTO of Komodo, a non-custodial wallet and atomic swap DEX platform, we discussed the impact the upcoming halving could have on Bitcoin and the broader cryptocurrency market.
Bitcoin halving is almost here and all eyes are on the flagship cryptocurrency. This major event will halve the block reward, impacting the supply and availability of the primary cryptocurrency.
Currently, investors and market observers are divided on how these events could impact Bitcoin’s future trajectory. Some argue that Bitcoin will follow past trends, while others believe that this market cycle is different.
Kadan Stadelmann, who has led Komodo since 2016, shared many insights about the future of Bitcoin.
What do you think about this Bitcoin halving? Do you think the halving will spark public interest in cryptocurrencies?
Each Bitcoin halving is important because it reduces the amount of new BTC mined in each block, causing a supply shock. There is a lot of optimism surrounding the Bitcoin halving within the cryptocurrency community because historically it has started a new bull market cycle. Due to the price increase, mainstream media outlets have started talking more positively and more frequently about Bitcoin and other cryptocurrencies, which has sparked greater interest from both retail and institutional investors.
What about the risks? Will the halving affect the number of miners since the cost per token doubles? If so, what impact will it have?
It is certain that the 2024 halving or future halvings will reduce mining profitability, resulting in fewer miners. However, if the price per Bitcoin continues to increase over time, this should at least partially offset any potential losses from reduced mining rewards. It is also likely that more large companies will start mining Bitcoin.
Institutional demand has been cited as a key driving force triggering a bull market in 2024. Do you think demand is big enough to cause a supply shock?
There is enough institutional demand to cause a supply shock. On the demand side, capital inflows into Bitcoin ETFs have been massive. It took just seven weeks to reach the same level of inflows that it took a gold ETF three years to achieve. MicroStrategy is also increasing its purchases. On March 11, Michael Saylor announced that he had purchased 12,000 BTC for $821.7 million, and a few days later announced plans to raise an additional $500 million to acquire more. On the supply side, the Bitcoin halving in April will halve the supply of new issuance. Collectively, these events are enough to create a major sense of FOMO among investors.
Does this mean that demand is already priced in, or has it not started yet?
Retail demand appears to be lagging institutional demand early in the current market cycle. However, it is also possible that a significant portion of this cycle’s retail demand will be met by spot Bitcoin ETFs. That means there could potentially be the first group of cryptocurrency investors choosing to buy Bitcoin indirectly through ETFs rather than through cryptocurrency exchanges.
And do you think this halving will inspire confidence among retail investors?
Halvings generally inspire market confidence for several reasons. First, it is an argument against fiat currency. Investors know that Bitcoin continues to experience increasing deflation every four years. Meanwhile, fiat money regularly worsens inflation, as evidenced by this week’s disappointing US economic data (CPI and PPI). Second, the entire cryptocurrency market is generally driven by the success of Bitcoin. Bitcoin typically gains a lot of media attention after a halving as it gains more market value. As a result, the same goes for numerous other cryptocurrencies.
We have seen in the past that altcoins always tend to follow Bitcoin. Are there any specific altcoins that benefit from the halving?
It is difficult to pinpoint which specific cryptocurrency would benefit most from Bitcoin halving. Rather, most cryptocurrencies are likely to increase in value from the second half of 2024 to early 2025. When deciding which cryptocurrency to buy, it is important to look at whether it offers long-term value regardless of cryptocurrency market trends. — Consider factors such as token economics, technology, and use cases.
The most anticipated question: How do you predict the price of Bitcoin after the halving? Let’s say 3 or 6 months later.
BTC may trade sideways for three months after the halving due to selling by miners. However, over the long term (e.g. 6-12 months), if the historical post-halving trend repeats this cycle, BTC price should rise. I expect this bull cycle to remain strong until 2025, and I wouldn’t be surprised to see it continue beyond that because institutional demand is showing up so early.
And what about the more immediate impacts of halving the price of Bitcoin?
Bitcoin price is highly volatile, leading to halving. The market looks very bearish at the moment, but this has been the norm in previous halvings. Just when people think Bitcoin will remain dormant or even bearish after the halving, the market awakens historically very quickly.
So are you bullish on Bitcoin?
I am optimistic about the medium- to long-term future of Bitcoin. Now, based on the new scale of adoption among institutional investors and the proliferation of spot Bitcoin ETFs, Bitcoin could reach $100,000 by the end of the year. After the major Bitcoin rally begins, we will likely see a market-wide rally for most altcoins later this year or early 2025.