Bitcoin Halving 2024
hi everyone thank you so much for
joining our conversation today on all
things Bitcoin in the upcoming Bitcoin
having my name is Lexi Perry and I’m
going to be your host for today’s
session and joining me today I have
Christopher Jensen who leads digital
asset research for our team welcome
Christopher hi there thanks for having
me so for folks who aren’t familiar with
our team or maybe are hearing from us
for the first time our dig assets team
here at Franklin Templeton has buil been
building in this space for quite a while
since 2019 across three main pillars
digital assets technology digital assets
investment strategies and node
operations um and today I’m excited to
speak with Christopher again on all
things Bitcoin including the upcoming
having event which is predicted to
happen uh this Friday or Saturday
depending on what time zone you’re in
but before we dive in Christopher I
really want to give the audience some
background on you and how you got
started in this space so can you briefly
describe for us your role on the digital
assets team and also how you got started
um in this cool digital assets
space sure so um I come from trafi um
the buy side um have about almost 20
years of investing experience with a
focus on alternative asset classes
private credit and Tech enabled Finance
joined Franklin Templeton in 20 2015 on
the credit team uh and started investing
in crypto personally uh in early January
or in January
2018 uh after joining Franklin I soon
met Roger Bon who now runs the Franklin
digital Assets Group and Tony peor who
heads up the digital asset investment
strategies team they were working on all
sorts of interesting problems and
opportunities at the intersection of
technology and finance you know an area
I’m extremely passionate about so I was
hooked from the get-go joined the team
uh and currently serve as the director
of research for our digital assets
investment strategies we built a strong
team comprised both of fundamental and
quantitative analysts our primary focus
is on coming up with interesting digital
asset opportunities to put into client
portfolios awesome that’s super great
context really appreciate that
Christopher and also super cool to hear
how you got involved in this space I
know everyone’s uh story is unique so in
our conversation today again I do want
to focus on the upcoming Bitcoin having
um and how this event might impact
bitcoin’s price going forward but before
we do that I think it’s important to
level set for any listeners who might
not be familiar with uh this space or
new to bitcoin um and so Christopher
through your role on the team again
you’ve pioneered some really cool and
new ways of analyzing these unique
assets like Bitcoin um through
fundamental and tokenomics focus
research so can you walk talk us through
this sort of valuation process at a
really high level um and then also give
us your perspective on how you view
Bitcoin relative to other digital
assets yeah Bitcoin is definitely unique
amongst a digital assets it’s the first
cryptocurrency developed uh it dates
back to the global financial crisis uh
where either an individual or group of
people using the pseudonym Satoshi
Nakamoto uh released the Bitcoin white
paper that was in the fall of 2008 and
it outlined the idea for a decentralized
peer-to-peer electronic cash system
basically a digital currency when you
fast forward to today Bitcoin is
primarily used as an internet native
decentralized store of value but you
know it’s also used for payments and
other things when it comes to valuing
digital assets like I said you know
Bitcoin is a bit unique with other
digital assets we really look for a
value acral mechanism so what that means
is some way for the value of a token to
reflect the value of the network that’s
being created with Bitcoin because its
primary use case is as a store of value
uh we do a few different things we can
look at other store of value assets kind
of look at comps we can look at flows
and onchain data um and basically just
try to triangulate on a sense of value
through a few of these different
approaches I’m definitely a blend of of
Art and Science and and that’s what’s
kind of fun about and unique about
digital assets they have qualities that
are you know commodity like here that
you know money like um and we also look
for some of these Capital asset features
when we’re when especially when we’re
evaluating other digital assets yeah
that’s really great color um and as you
mentioned you know Bitcoin is a very
unique digital asset and the way that
the protocol’s code is written is
intended to have deflationary effects on
bitcoin you know the asset or the Tok or
the coin however you want to phrase it
so can you touch on what the having
event it is and how this impacts the
supply of
Bitcoin yeah so as you allude to it’s an
extremely important uh and recurring
event in the Bitcoin ecosystem so
roughly every four years the reward for
mining new Bitcoin gets cut in half and
that’s why we refer to it as the having
so the first having was in 2012 uh which
makes this next one on like you said on
Friday you know April 19th or you know
overseas on on April 20th the fourth
having uh in bitcoin’s history and once
the having occurs you know it isn’t
gradual it’s all of a sudden the the per
block mining reward will be cut in half
this time from six and a quarter to
three and an eth uh Bitcoin per block um
and the having will continue happening
again you know once every four years
until the roughly until the full 21
million Bitcoin are in circulation and
you know don’t worry this isn’t expected
for another hundred years or so so you
know it is kind of this ASM totic line
um and you know you might ask like why
does this exists why do we even have a
having and and that’s basically as you
allude to um part of the monetary policy
of the Bitcoin Network which was
programmed in you know at the at the
very onset so right now there’s 19.7
million Bitcoin in circulation that’s
93.7% of the total Supply and the whole
idea is that over time you know fewer
and fewer amounts of new Bitcoin enter
uh circulation so this ensures that
Bitcoin remains scarce remains a a
deflationary digital monetary asset that
people can count on and you know instead
of relying on people they rely on the
code this 21 million hard code it’s it’s
it’s there in the design of the network
uh and it’s one that the market can
count
on great so we touched on the having and
really what that is but looking to how
this might impact bitcoin’s price PR and
we’ve seen this kind of historically
where the having event has impacted
bitcoin’s price um you know as you
mentioned the the circulating supply of
Bitcoin is cut in half every time that
there’s a having so can you speak to how
we’ve seen historically the having
impacting bitcoin’s
price yeah so I mean basic supply and
demand right if we cut Supply in half
you would think you know all else being
equal constant demand you know price
will go up the the really interesting
thing here is that these having both the
actual date that they’ll occur and the
cut in the emissions like I said you
know these are all programmatically
designed they’re not surprises to the
market we know they’re coming uh and so
one might expect them to be always be
fully priced in and when we look at the
actual data on this it’s it’s pretty
interesting um you know you have to
caveat it with uh there’s only been pre
three prior having so that you know the
data set is limited but what we can
observe from looking at those prior
having is that in all three instances we
did see you know positive price action
headed into the having um but perhaps
surprisingly the more pronounced price
action typically happens after the
having but it’s not suddenly it’s it’s
it’s really drawn out um and again just
you know caveat all of this with you
know this is extremely volatile asset
but when we look at the prior three
Cycles this is definitely what pops up
in the data if you look at 2012 2020
the price of Bitcoin was roughly up 10%
30 days after the having but in 2016 it
was it was down roughly 10% 30 days
after the having it’s it’s only when you
really zoom out a bit and you look at
the price of Bitcoin call it six months
after the having that’s where you see
the outsid returns you know again
historically and we saw this um across
the prior three havs it’s really you
know you see that that price action
materialize overall it you know six
months uh so while there’s no way to
predict what will happen after after
future having Cycles uh and past
performance doesn’t guarantee future
results it is encouraging to see that
yes the market anticipates it and knows
when it’s going to happen you see
positive price action leading into the
having um and sometimes it can be a sell
the news on the actual date of um and
you know this time might be no exception
but when you kind of zoom out look at
the next six months that’s usually where
you see outsize price
performance great and so fast forwarding
to today because we just covered kind of
how we’ve seen you know the having
impacting bitcoin’s price historically
um we recently just saw Bitcoin hit
all-time highs of over
$73,000 which is crazy um so how do we
expect this having will impact the price
of Bitcoin and just also factoring in
you know there’s been a recent influx of
investment vehicles in the market that
has allowed investors to more easily
access or buy Bitcoin and hence we’ve
seen some kind of more institutional
demand for these products so how does
that factor in and how do you think or
how are you thinking about this upcoming
having in relation to bitcoin’s
price yeah you’re you’re absolutely
right I mean you know when we look year
to date Bitcoin is one of the the best
performing assets uh and but there’s a
few drivers at play yes we know the
having is right around the corner you
know as you mentioned you know there are
these new investment products you know
and their impact on this asset this
asset class you know cannot be
understated it’s basically democratized
you know crypto and digital assets uh
for the masses so that’s that’s a huge
driver um you know and so one one might
actually be able to make the argument
that perhaps a disproportionate amount
of that having price action was pulled
forward this time around and maybe we
should be tempering expectations you
know for the next six months um and if
you look at you know quite recently
crypto markets have pulled back you know
and and we attribute that to a lot of
the the geopolitical tension that’s out
there fears over a higher for longer
rate environment so there there are
other factors at play um and while
there’s a lot of uncertainty at present
we actually do have an interesting
having precedent for that as well
because the last having in 2020 occurred
right in the middle of a global pandemic
so you know sometimes these events do
happen when there is a lot of uh
uncertainty and still at least that last
go around you know we did see um that
positive movement thereafter for about
you know six months or so so I don’t
know we’re reminded that old adage right
while history doesn’t repeat itself it
often Rhymes um and so we we remain
quite constructive both on bitcoin and
digital assets broadly speaking you know
admits some of the current volatility
and we attribute this to on the demand
side new investment products new sources
of demand new flows and on the supply
side you have the Bitcoin hav which
which Cuts supply of new Bitcoin in
half so quick question on kind of that
topic of um you know the institutional
demand that we’ve seen with these
Bitcoin investment vehicles entering the
market um some investment professionals
have questions you know why hasn’t this
price been already baked in uh what’s
your take on
that yeah I think think um you I think
so some of it has I think that’s that’s
where we’re kind of coming on this um
some some of it certainly has um and
while you know the institutions seem to
be here you know we know that it takes
um a lot of time a lot of Education a
lot of onboarding to really fully tap
into those markets so you know we see as
early days I mean I think um these past
few months have been have been great but
you know we’re still making inroads as
an industry there’s still more to come
um and so I think while yes perhaps some
of that price action has been pulled
forward you know and it was great to get
an all-time high before the having
typically that happens after um we still
think you know there’s there’s more room
to run awesome so looking forward to the
future I know you’re always looking at
some really cool and exciting projects I
do want to touch on that but before we
do and kind of close out um I wanted to
ask you about you know looking forward
over the next six to 12 months um how do
you see these new investment vehicles
that have allowed investors to more
easily access Bitcoin um impacting the
adoption of the rest of the market of
digital assets what’s your take on
that yeah sure I think it’s um it’s
quite transformative um we’re seeing it
you know in the US um with new types of
Institutions new investment products and
and like as I mentioned that Trend will
only continue we’re seeing it overseas
um you know there’s some some really
positive news coming out of Asia
recently um and I think as you get more
and more different types of investors
and institutions exposed to this asset
class um even if it’s not you know the
kind of traditional way of buying and
holding you know Bitcoin in a you know
in a ledger device or something like
that it it does get you exposure and
once you own a little bit you start to
pay attention to it uh and it and it
makes you C ious about what is the
underlying technology here what other
Innovations are happening in this space
um and so I really do feel like it is a
lead Domino and um you know I think it
bodess quite well for the asset class at
large awesome so want to touch quickly
before we close out on some cool or
exciting use cases that you’re looking
at so what are you excited about within
the Bitcoin ecosystem and can you give
some
examples so there’s actually a lot of
exciting development a lot of innovation
happening in the broader Bitcoin
ecosystem probably more now than there’s
ever been so you know there there’s
quite a lot to be excited for um you
know our Venture teams they’re looking
at early stage project projects and
teams you know innovating in the space
some things that that we’ve been
identifying as as interesting and new um
is a couple projects one is uh Bitcoin
ordinals kind of similar to nfts but
they’re on bitcoin um and runes which
will be a new fungible token standard
and that actually goes live on bitcoin
at the time of the having so right
around the corner um these are two very
new areas um that our team has actually
written about um you can you know follow
us on Twitter the Franklin tlon digital
assets Twitter account where we kind of
put out um various research on things
that are topical um like like ordinals
and like runes and one of the things
that we’re excited about this is you
know for one of the first times here
you’re seeing kind of culture move on
chain not just to other ecosystems to
but to bitcoin itself so that’s a that’s
an area if you wanted to explore further
I would recommend you check that out as
well awesome and appreciate the plug to
our X account we’re working really hard
to pump out good research content there
um well awesome thanks so much for your
time today Christopher it was a pleasure
getting to dig a little bit deeper into
the upcoming Bitcoin having and your
view on how this might impact bitcoin’s
price um and even the adoption of
Bitcoin investment vehicles going
forward um as Christopher mentioned uh
before we close out this event I want to
quickly remind the audience to keep up
with us on our ex account that is
FDA for more digital asset related
events research content um things about
our views on the space and even
potentially some memes thrown in there
if you have any questions about Franklin
Templeton or digital asset offerings
please call 1800
632
2301 again I’m Lexi Perry thanks again
for attending our session today on the
Bitcoin having um thanks again
Christopher and keep up with us on
X great thanks
Hear our Director of Digital Assets Research, Christopher Jensen, discuss pertinent questions about the halving including what it’s meant historically for Bitcoin prices and why this time could be different.
Recorded: Thursday, April 18th, 2024
Glossary and Important Information: https://s.frk.com/3w1oIJp