OPTO Sessions

Bitcoin Bull Predicts 40% BTC Price Drop Post Halving

Dr. Jeff Ross, Founder and Managing Director of Vailshire Partners and Vailshire Capital Management, joins OPTO Sessions to discuss why he believes the bitcoin price could fall in the aftermath of the halving before gaining in the second half of 2024 through 2025.

Ross is Founder and Managing Director of Vailshire Partners and Vailshire Capital Management. He is also a qualified radiologist and has recently returned to practice following an 18-month sabbatical.

Ross is also a bitcoin bull. In fact, he goes as far as to say that he believes bitcoin could be good for people’s health, since health issues in the West are often caused by stress, much of which is due to the demands of “staying on the hamster wheel” in an economic system underpinned by (inherently inflationary) fiat currency.

Ross has held a position in bitcoin since 2015 but, in his own words, “didn’t properly understand it” until 2019.

“I like to say I’m the class of 2015, but I got held back until 2019,” he tells OPTO Sessions.

Bitcoin’s Baby-Boomer Bull Run

With spot bitcoin ETFs and the Wall Street adoption of bitcoin having been under discussion for years, Ross thinks January’s spot bitcoin ETF launch was “the inevitable next step”.

However, he is of the view that the success of the ETFs since their launch has led to over-optimism in the market. “I’ve seen enough cycles to see how it works,” he says.

“I think this is setting the stage for the next bull market, which still hasn’t started yet.”

Ross expects the bull market to begin in the second half of 2024 and extend into 2025, with Wall Street involvement playing a significant role in driving upward price movement.

“I think that’s when we see a significant move higher, as the baby boomers start getting into bitcoin. And I think their primary vehicle will be through these ETFs.”

That said, he doesn’t agree with the most bullish predictions, such as ARK Invest CEO Cathie Wood’s suggestion that bitcoin’s price will reach $1m in the coming years.

He believes that the impact of the ETFs in opening bitcoin up to the baby boomer demographic could be transformative, given that the cohort has approximately $75trn in assets.

As things stand, very little of this is invested in bitcoin. However, Ross believes that “they will start to [get] FOMO probably [by] the end of this year, but more likely as 2025 rolls on, and that bitcoin bull market rolls on.

“I think that’s when we see a significant move higher, as the baby boomers start getting into bitcoin. And I think their primary vehicle will be through these ETFs.”

Halving Cycle Goes Full Circle

With the next bitcoin halving imminent, investors are keen to know how the bitcoin price is likely to respond. Ross believes that the answer can be deduced by examining the cryptocurrency’s past price movements.

“First of all, I like to not make predictions, I make observations based on past cycles. I’m a patterns guy,” says Ross.

In previous halving cycles, he notes, bitcoin’s price was approximately 50—60% of its recent high by the point of the halving.

He explains that, during 2021, China’s decision to ban bitcoin mining disrupted the usual cycle by suddenly imposing selling pressure on bitcoin. Without this, Ross believes that the bitcoin price would have reached approximately $125,000 in November 2021. Of this figure, 50—60% approximates to the same range in which bitcoin is trading during early April, in the lead-up to the halving.

Immediately after a halving, Ross explains that it is not unusual to see bitcoin’s price drop by 30—40%. This is largely due to a “buy the rumour, sell the news event” — hype in the build-up to the halving event stimulates buying activity in the expectation of rapid upward price action, with those buyers then immediately disappointed afterwards because there is a dearth of buyers left in the market.

“So, my price range expectations for the coming months: as we head into May and June, I think we can see Bitcoin fall about 40% from this recent high of $74,000. It could drop 40% to $45,000 or $44,000.”

Movements like this, he says, would be “totally within the normal range”.

By the second half of the year, though, Ross expects the economic cycle to be turning favourable to bitcoin again. This could drive the price as high as $125,000 by the end of the year, followed by a cycle peak of approximately $500,000 approximately 18 months after the halving (in Q4 2025).

Purchasing Power

During bull periods, this sort of price action would be highly beneficial for bitcoin miners. However, Ross cautions that he does not believe miners can outperform bitcoin over the long run, largely due to the unpredictability of their business models.

“For people who understand anything about any kind of commodity mining, it’s dog eat dog,” he says. “You can buy the world’s best equipment, you can make massive allocations to it, but you can screw it up from an operations standpoint. You can have your equipment go bad, or become obsoleted by newer technology, and suddenly the stuff that was an asset to you is now more of a liability.”

For Ross — like many bitcoin advocates — the long-term value of bitcoin is as a hedge against the debasement of fiat currency.

Ross blames government policy for the inflationary tendencies of fiat. “They’re taking our purchasing power by spending more than they actually make. In effect, spending faster than the economy is growing.”

“For people who understand anything about any kind of commodity mining it’s dog eat dog.”

Conversely, he says, bitcoin prices fall over time because, without the debasing effects of government spending, it captures the deflationary effects of technological advances.

“The prices of everything will go down in bitcoin terms over the long run,” says Ross.

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