Was the Bitcoin Halving Last May a Third Turning?

If you’re not familiar with Bitcoin, you may not know about a major event that occurred last May when it went through its third halving. That means the block award paid to Bitcoin Miners was cut in half from 12.5 Bitcoins to 6.25. The reduction in the award is reducing the supply of Bitcoin just as it is gaining acceptance.

As you look at the potential of Bitcoin, it’s important to consider its history (karma) and its mission (dharma). The halving of Bitcoin's mining award in May could have completed its third turning. This may allow it to achieve its bigger mission.

Bitcoin Dharma vs. Karma

Bitcoin was supposed to emerge as a competing currency in a global economy that has seen significant expansion in coordinated monetary policy. With inflationists at the wheel, it is unlikely that price and economic stability will be able to be maintained forever. The risks of significant inflation globally is on the rise as monetary and fiscal policies merge.

If you’re not familiar with dharma, it essentially represents one’s lifelong task. Karma is the path you take to complete the task.

Bitcoin has a boom and bust history that centers around its halving. This would appear to invalidate it as a potential form of money, but each successive period of volatility helped it take another step into public view and unlocking its potential adoption.

Bitcoin and the Third Turning

The three turnings of the wheel (dharma) of Bitcoin are rooted in the sutra stream of teachings in Budhism. The first turning is the abandoning of negative actions of the body, speech and mind. The second turning is about abandoning clinging to the self of individual and of phenomena. The third turning is about abandoning clinging to emptiness. Each of Bitcoin’s turnings happened around the halving of the mining award.

First Turning

The first turning occurred in 2012 when the price rallied 8000% in the next 12 months. The rally ended with security issues that arose from the Mt. Gox bankruptcy. The rally drew the attention of Chinese miners of the crypto and the rise of ASICs. The awareness of the opportunity of mining and the need for security underscored this period.

Second Turning

The second turning occurred following the halving in 2016. Bitcoin’s price rose over 2000% by the end of 2017 and during this period many other cryptocurrencies began to be introduced. As the price was advancing, there was a furious amount of speculation and increased awareness by regulators. At this point, cryptocurrency began to gain more full adoption globally as a means of payments, particularly cross-border payments.

Third Turning

The third and final turning may have happened this year. This is a result of the merging of governments and central banks globally to combat the deflationary policies to prevent the spread of COVID-19. We’re still in this phase as understanding and awareness of Bitcoin as money increases among institutional investors. Following its having in May 2020, the price has risen from around $8700 to over $28,000.

Bitcoin Dharma

Ultimately, it will be Bitcoin’s role as a form of money that will allow it to realize its full potential. Similar to gold, it will probably never trade at its full valuation. However, the increased awareness over the potential need for a store of value may increase as the stagflationary policies of the U.S. and other foreign governments continue to create a bullish environment for the crypto.

In order to understand Bitcoin’s valuation, it’s important to understand its market cap relative to gold. Currently the market cap of gold is around $10 trillion, and Bitcoin is nearly $500 billion. If Bitcoin were to trade at a similar market cap to gold, that would mean the price trading 20 times higher than its current value.

As you consider the fact the U.S. Stock market is trading around $100 trillion and begin to add in all of the value of other financial and physical assets, the number grows significantly.

Conclusion

Bitcoin is overbought in the near-term. However, the bigger picture for Bitcoin is one of undervaluation. The karma of Bitcoin has allowed the crypto to work through the progression or turnings to a point where it may be better prepared to realize its potential value, dharma, in either gold terms or in terms of global financial assets. For those holding bitcoin, either scenario would be long-term bullish for it.

Learn how to deal with uncertain markets by learning about the Vomma Zone. Not a subscriber? Become a TheoTrade member.