# Is the next Bitcoin Block Reward Halving already baked in to the price?

For those of you that subscribe to the efficient market hypothesis (EMH), they would be saying yep, absolutely it is priced in.

The EMH is an investment theory where prices are said to already reflect all available information.

Meaning that if something is known by the market, it is already baked into the price.

Something like Bitcoin's block reward halving would definitely fit into this definition.

Normally I would mostly agree with the EMH, though I don't fully agree with it. For example, I have seen too many times where investor sentiment/emotion bids up prices or drives prices further down than they "should be".

# I don't think it's baked into the price...

On first glance, this sounds crazy.

Investors have had years now to prepare for this block reward cut, why would it not already be reflected in the price?

I can't say for sure why it's not, but was it baked in during the previous halvings?

https://i.postimg.cc/vTzYJ5RP/EMk-Vg75-Xs-AAw-Zy3.png

(Source: https://twitter.com/Bitcoin/status/1209521632261398528)

Looking at both of the previous halvings in the chart above, it certainly looks like it wasn't baked in at all.

The price went up considerably in both instances shortly after the halvings.

My guess is that it all comes down to basic supply and demand.

Right now we are at somewhat of an equilibrium point with bitcoin. The new emissions roughly offset the new demand coming in, which keeps prices relatively flat around $7k.

But what happens when the demand stays constant but the emission rate gets cut in half?

Basic supply/demand economics would dictate that prices would have to go up.

# I think prices will go up significantly after this next halving yet again

Yes, the market is different now, there are many futures and options products that didn't exist during the previous two halvings.

And these are great tools for miners to hedge against the halving effects.

Will they make a difference with how bitcoin behaves this time around?

I honestly don't think they will.

I think the demand will not only stay constant at current levels, but actually increase over the coming year or two, and combined with less new supply hitting the market, prices likely have no where to go but up.

If that's the case, this next halving will likely be the catalyst for the next parabolic move in bitcoin's price.

Stay informed my friends.

-Doc