The potential approval of spot Bitcoin exchange-traded funds (ETFs), the looming BTC mining reward halving and major regulatory and enforcement actions have a profound psychological effect on market prices.
This is a key takeaway from the Next Block Expo conference in Berlin, just as Bitcoin tipped past $42,000 for the first time in over a year.
Animoca Brands CEO Robby Yung, gumi Cryptos Capital managing partner Miko Matsumura, Binance regional manager Jonas Jünger, and Polkastarter business development lead João Leite weighed in on whether the current cryptocurrency bear market was coming to an end in a conversation with Cointelegraph.
Bitcoin halving is a psychological phenomenon
Considering the influence of the four-year cycle between Bitcoin (BTC) mining reward halvings, Matsumura likens the rhythm to that of a medieval battering ram.
“Every four years, we swing the ram, and we smash. Four years is long enough that the people inside the castle think we’ve gone away,” the venture capitalist explains.
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Matsumura says that the halving cycle involves an inherent Schelling focal point mechanism, which is a game theory concept and social phenomenon where people or organizations can coordinate without communication.
“It’s important to think about it as a psychological training phenomenon because each time it works, it inclines people to go with it the next time it happens.”
He also suggests that Bitcoin’s stock-to-flow model clearly shows that the actual cut in BTC supply is getting smaller with each halving, which means “the actual mathematical economic effect is smaller.”
Cointelegraph’s Gareth Jenkinson alongside Matsumura, Yung, Jünger and Leite during the Next Block Expo in Berlin. Source: Cointelegraph
Jünger echoes these sentiments by highlighting the deflationary mechanism of the Bitcoin protocol and that there’s never talk of halving the fiat money supply.
“It’s just such a foreign concept to everything with fiat money that every time it occurs, it’s just such a celebration of…..
