With the third halving of Bitcoin (BTC) in just over 24 hours, the hype around the overall market surrounding the event has grown exponentially, especially after balancing for some time at the $ 10,000 threshold. On May 9, BTC fell to the $ 8,100 level before recovering slightly to around $ 8,800.
However The fact that BTC was able to avoid the declining market pressure raised some confidence in the hearts of investors around the world, even though Bitcoin faced a 15% decline in value on May 9.
In addition, it should be noted that the value of Bitcoin has almost tripled since falling to a price of around $ 3,867 registered on March 12, so a report released by blockchain research company IntoTheBlock claims that nearly 85%, or 25, 79 million of all wallet addresses that currently have Bitcoin can be sold at a profit from their holdings.
With all of this information available, it’s worth looking into what the major Bitcoin market indicators really say about the future of the currency after its halving event and whether or not the crypto asset is destined for a major financial rally. As many experts have repeatedly emphasized since the beginning of the year.
Relationship to BTC’s fear and greed index
To get a better understanding of everything that’s happening with the halving, Cointelegraph turned to Pascal Gauthier, CEO of Ledger, a manufacturer of hardware wallets for cryptocurrencies, who believes Bitcoin is the index of fear and greed It was held very conservatively in March and April. However, he added that his company has seen a large decoupling of people’s interest in cryptocurrency that has arisen from social media and Google searches, fearing the volatility of cryptocurrency markets.
He also said that as the halving halved, the yaw aspect of the FG index appeared to have increased exponentially, adding that this phenomenon was largely due to the above event.
Similarly, David Waslen, CEO of HedgeTrade, a blockchain-based forecasting platform, believes that halving is only a day away. Bitcoin hovers in the neutral zone of the fear and greed index. come out of a long bearish stretch in the excessive fear zone. He added: “With record exchange volumes and all the money flowing in stable coins (which could easily be passed on to Bitcoin), this neutral phase may not take long.”
Jeffrey Liu Xun, the CEO of XanPool, a peer-to-peer trust gateway, repeated the mood mentioned above, while the BTC index for fear and greed showed neutral signs. The element of greed seems to take over and increase pretty quickly Xun said:
“The FG index has just moved from ‘extreme fear’ to neutral territory and seems to be gaining strength towards ‘extreme greed’.”
The effect on the hash rate will be noticeable
Halving bitcoin is a key event that most people in the cryptocurrency community look forward to every four years, as it is directly related to supply and demand for the largest crypto asset. And although the halving is not always directly related to the BTC yaw and yaw index, it affects the cryptocurrency hash rate in 100% of cases.. This is because after the event, the block reward sizes are reduced, which leads to a drastic increase in requirements regarding mining efficiency.
For a more complete overview of how the halving affects Bitcoin’s hash rate, Cointelegraph turned to Lennix Lai, director of financial markets at OKEx cryptocurrency trading platform. In his opinion:
“In the short term, we can see that some miners cannot continue the game. This means that the hashrate has the potential to decrease. However, with improved equipment and increasingly efficient mining, the hashrate will gradually increase again.”
Similarly, Marie Tatibouet, CMO of Gate.io, a Bitcoin exchange platform, found that Bitcoin halving events have traditionally been followed by a gradual increase in the rate of network hash based on previously logged data, only by three To decrease months after the event. Then she said:
“The hash rate also increased rapidly after the second halving in 2017. If we engage in one of these data trends, I think the hash rate will increase within a month of the halving.”
Finally, some experts also agree with the idea that an increase in the hash rate is likely in the near future, as a large number of BTC miners may need to start consolidating their resources to stay afloat in this space. In addition, it is possible that the day-to-day work of this burgeoning sector can be defined by the activities of a few individuals or groups who have substantial equipment and the capital to withstand the impending danger of reduced block rewards.
The effect of halving on the price of Bitcoin
If the reduction in Bitcoin per block reward ratio becomes immediately apparent, i. H. The amount of BTC received per block decreases from 12.5 to 6.25. Lai believes this reduction will most likely force smaller miners to close their businesses and create greater liquidation pressure, which in turn will result in This can cause the cryptocurrency market to become bearish in the short term. In the long run, however Lai believes that the price of BTC will recover as BTC has proven to be a safe asset from a macroeconomic perspective.
Even after cutting in half when Bitcoin’s hash rate is falling, historical data seem to indicate that the price of the coin is likely to follow suit. With this in mind, looking at data from 2012 and 2016, the main price of the crypto asset recovered before each event and was corrected shortly afterwards. In both cases, the value of BTC rose by a whopping 10,000% in the medium term in 2012 and again by 2,500% in 2016.
Xun also believes that a price drop can occur in the short term. In this context, he made it clear: “I see a local peak that occurs at the time of halving by + – 2 days or so. And then the price is lower in the short term. “However, Kade Almendinger, co-moderator of the dark side of the HODL Moon podcast, firmly believes that a possible future monetary increase from BTC has already been factored into the coin’s existing value. He added:
“We saw a price increase from April 28-30, and later a billing correction on April 30. It reappeared on May 6 and appears to have support at $ 9,200. The bulls will likely go up before halving, and I wouldn’t be surprised if BTC were $ 10,000 or more before halving, with modest billing and price correction after halving. “
- The volatility of the hash rate in this phase before the halving of Bitcoin shakes the entire mining sector
COVID-19 induced uncertainty
Taking into account the increases after halving that followed the first two halves, It would not be surprising if BTC saw similar growth in the near future. Due to the current COVID-19 pandemic, experts are eagerly awaiting this time how the current situation will affect the financial future of the most important cryptocurrency, especially since the virus continues to bring stock markets to their knees. from around the world. On this subject, Tatibouet explained:
“I think the COVID 19 pandemic plays a big role in the wider scheme of things. Initially it caused some concern in the investor community and eventually stabilized. We saw that BTC trading on our platform increased after COVID-19 reached China. I think the overall increase in bitcoin trading volume is responsible for Bitcoin’s recent recovery and ultimately for its stability. “
Similarly, Lai also believes that the current cryptocurrency market appears cautiously optimistic despite the COVID-19 crisis that is plunging the global economy into a massive depression. In this context, he added:
“Most central banks have considered alternative classes of non-monetary assets. However, they have their limits when it comes to covering the risks posed by the global blockade caused by COVID-19, particularly on the stock exchange. “
Is Bitcoin’s Momentum All FOMO?
To assess whether BTC’s current financial momentum is sustainable or just a by-product of the widespread fear of missing out on potential profits or FOMO, it should be borne in mind that ongoing optimism in the industry may be due to the fact that Bitcoin Network has matured so far in the past decade that it now supports hundreds of exchanges, futures markets, credit programs, wallets, exchange platforms and various blockchain-based financial applications. With this in mind, Waslen added:
“People are definitely optimistic, and maybe part of it is based on hype. But it should be on all the work in progress and the fact that Bitcoin has the world’s largest decentralized computer that offers security to its global users. It has been growing for 10 years, has not been hacked, and has outperformed all other assets (over the decade). “
Finally, Gauthier believes that the pandemic has caused traditional financial players to rethink their deeply rooted beliefs that many large companies view Bitcoin as a legitimate store of value, which he believes has helped create positive momentum for the large crypto asset.
A perspective after halving
Most cryptocurrency experts believe that BTC’s financial potential cannot be accurately determined in the short term due to a number of technical variables that are difficult to assess.
Since the current value of Bitcoin is at a much lower level than in 2017, Many of the “types I want to get rich quickly” have largely disappeared from this area and have largely left the ecosystem in the hands of those who are interested in leveraging BTC’s digital potential to create novel financial platformsas well as other similar offers. Adam Traidman, CEO and co-founder of BRD, a crypto wallet provider, told Cointelegraph about the future of Bitcoin:
“Warren Buffet will not be investing in Bitcoin because it is too volatile, but dealing with oil. Old ways of thinking are behind you. Compared to most other assets, if you had Bitcoin later this year you would have ended up at the top There is a reason why many long-time Bitcoin enthusiasts say that no matter what happens to the volatility, at the end of the day if you believe in the future of Bitcoin, each of these prices is big business. “