Bitcoin halving could set up cryptocurrency for long-term gains

Bitcoin's (BTC-USD) halving event is expected to occur over this weekend, either Friday, April 19 or Saturday, April 20. The halving event operates to reduce the number of available bitcoins in circulation once every four years, ultimately controlling inflation within the cryptocurrency.

CoinFund Co-Founder and CIO Alex Felix and BitGo Managing Director and Head of the Go Network Matt Ballensweig join Market Domination to discuss bitcoin's long-term price trajectory.

Ballensweig considers the halving a "non-event" for the short-term scope of bitcoin, advising traders to "stick to the basics" when managing crypto-adjacent stocks like bitcoin miners. Felix believes bitcoin could ascend to anywhere between $150,000 to $200,000 over the next couple years based on price progressions following past halvings.

Want to learn more about the bitcoin halving? Watch this video from Yahoo Finance for a quick explainer: Bitcoin halving: Explained

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video transcript

JULIE HYMAN: The long-awaited or at least long discussed Bitcoin halving is expected to happen over the weekend. And it will the amount of new Bitcoin available on a daily basis. It's bad news for crypto miners. What does it mean for investors? We're looking at how to navigate the big picture with the Yahoo Finance playbook.

We're joined by Matt Ballensweig, Head of Go Network at BitGo, and Alex Felix CoinFund Co-founder and CEO. Guys, thanks so much for being here. We appreciate it. So, I guess, first of all, we have to ask what's going to happen to the price.

Because in past halvings, we have seen the price rise after it. But the market seems sort of bigger now, in part, because of the ETFs. I don't know if the dynamics are different. Alex, I'll start with you on what you think.

ALEX FELIX: Great. Thanks for having me on, Julie. Everyone should own Bitcoin. It is the best performing asset of all time with 153% annualized return from 2011 to 2024. Runners up like NASDAQ, US growth, and even the S&P have not been able to keep pace with the returns we've seen. And despite four draw downs of 75% plus since 2011, it's still alpha for portfolios.

In terms of where we're headed here, if you look at past cycle highs, you know, we tend to see explosive growth as we move through the previous all time high. Last high suggested around a 250% move. And so that puts us in the 240k range from here. So, I think, 150 to 200k could be achievable in the next year or two. But hard to put an exact time frame on that.

- You know, Matt, thinking more broadly about the crypto market right now coming into a news event like the halving. I'm just curious what you make of where Bitcoin sits within that overall trade. Is it we have an altcoin summer again? Where are we at with--

Ether, we haven't talked a lot about ether over the last couple of months with this Bitcoin run to record highs. So we'll get through having this weekend. But where are the vibes at I guess we'll say in terms of the crypto trade today?

MATT BALLENSWEIG: For sure. And thanks so much for having me on. I think from a trading perspective, you have to think about this in two different unique lenses. One, short-term and one long term. It's a lot easier to see this forward using a long-term lens.

But if you're a trader and you're in the-space, and you have to think about this short-term, I think you the way to position yourself to think about this is number one like usually in the short-term, this is really a non-event. If you look at the way Bitcoin's performed in the month following each halvings back to 2012, in 2012, it only performed you positive 9% in the month following the halving.

2016, it was down 10%. And 2020, it was plus 6%. So this could turn out to be a nothing burger kind of in the short term here. It's only 450 Bitcoin delta that is no longer going to be on the order book on the supply side. That's the difference between what miners can sell tomorrow versus today.

And that alone on a daily basis is not going to move the price. That being said, in the long-term, the 450 Bitcoin per day adds up. That's over 12 billion of net less supply.

And you combine that with the 12 billion of net new demand we've seen from institutions coming into the new ETFs. And I think long-term, you're going to start to see a pretty significant move in BTC and the market at large. If you look at Bitcoin's performance the year following the halving, it was plus 8,000 plus percent in 2012, plus 285% in 2016 and plus 550% in 2020. So I think long-term here, we could be set up for a pretty good move.

JULIE HYMAN: OK, guys. So if we accept the thesis that it's going to go up over the longer-term, the question then becomes, how do you take advantage of that? Do you buy Bitcoin underlying? If you're able to, do you buy it through these new ETFs? Do you avoid the miners like the plague? Because they're seen as maybe being disadvantaged by this. Matt, I'll take you first on this.

MATT BALLENSWEIG: For sure. I think, look, if you're trying to trade minor stocks, it's just a more complicated version of spot BTC. They're basically derivatives of Bitcoin. But there's also idiosyncratic risks to each of these companies uniquely.

So unless you are an analyst that's willing to go down the rabbit hole of looking and analyzing each one of these minor stocks, I would stick to the basics here. I think one way to trade this, you have to have skin in the game. You have to be a long-term bull on Bitcoin. You have to have conviction and own the spot asset. So it starts by just being long BTC spot.

If you're trying to hedge some of the short term volatility and chop that might come after this might be a sell the news immediate event, what you can do then is basically look to sell some BTC calls, maybe not too far out of the money. So something like an 80k June BTC call to generate some return. That could be 5% return depending on the strike and expiry, which is about 24% annualized to June.

And then you could use some of that premium to actually go long calls on also like ETH or other tail alts like Solana and even further down the rabbit hole to take advantage of a big move up potentially later on after the halving is in the rear view. So, that's one trade idea. But there are many out there.

- Yeah, and Alex, I'm curious how you also think about what your preference is when it comes to vehicles, setups, et cetera as we get you know both through this event. But again, in this whatever, the fourth bull market for crypto here. How you're looking at things?

ALEX FELIX: I agree with Matt. You want to belong the spot asset. And you can trade around that now with many different tools. We have CME options and soon to have ETF options. And you short interest can be built up there.

But we generally have a saying in crypto. Not your keys, not your coins. People have lost a lot of spot Bitcoin over the years. So you always have to be careful.

But really the happening here. it's the least interesting thing going on in crypto right now. It's a great opportunity for us to have the conversation about Bitcoin, to say thank you to Satoshi for creating the first blockchain, and solving the double spend problem.

But what's on the horizon is this is the first All time high where we've had regulatory clarity and institutionalization around crypto's main asset and its first blockchain, which is crypto, which is Bitcoin. But that's just one use case. Non-sovereign collateral, digital money, however, you want to frame the use case around Bitcoin.

And there's so much innovation going on atop blockchain rails that this is really the first asset that people own. And they're likely to look for higher growth, higher potential in other subsectors of applications and protocols that are being built to serve other use cases. For example, stablecoins, which are digital cash are now producing 30% more fees than Bitcoin transactions.

So we've seen it used case of just moving digital Fiat around on crypto rails. We have a lot of innovation in gaming, in financial markets, in AI, in many other subsectors that are just starting to adopt blockchain rails. And I think that as we start to see the fangs emerge, everything outside of Bitcoin Ethereum and Coinbase is less than six years old. And Bitcoin is leading the way here. We're likely to see a lot of other great opportunities to allocate more in different pockets of the crypto universe.

- Yeah, all right. Great. We'll leave it there. Matt, Alex, thanks for the time, and enjoy having this weekend.