Skip to content

Halving Bitcoin was not the apocalyptic event that some feared in the crypto world

May 15, 2020

After the recent and well-known halving event for Bitcoin (BTC), many in the industry had expected a drop in value, especially after BTC fell to just $ 8,100 on May 10. After the uncertainty above The flagship crypto asset grew 6% in less than 48 hours, rising to around $ 9,500. Now it could hit the $ 10,000 mark.

On Monday, crypto miners around the world found that Bitcoin’s native reward ratio had halved – from 12.5 BTC to 6.25 BTC – causing some uncertainty about the price of the coin. . This is because after the event, miners were forced to calibrate their operations to accommodate their reduced income and higher daily costs. And although mMany traders and analysts had expected volatility and turbulence to increase after halving. Most of these fears have not yet materialized.

In fact, within a few days of the four-year event, many cryptocurrency experts appear to be quite optimistic about Bitcoin’s future valuation, with some even saying Bitcoin can retest its highest previous value. For example, Simon Peters from eToro said recently that he would not be surprised if Bitcoin was re-entered the region of “$ 20,000 to $ 50,000 per Bitcoin” over the next 18 months.

Price stability after halving can promote acceptance

Halving Bitcoin was not the apocalyptic event that some feared in the crypto world
Halving Bitcoin was not the apocalyptic event that some feared in the crypto world

To better understand whether Bitcoin’s recent halving could meet expectations across the cryptocurrency market, Cointelegraph turned to Tim Rainey, CFO of Greenidge Generation, a New York-based cryptocurrency hybrid power and mining company. In her opinion, The halving overall met the expectations of most established mining companies that sell a significant amount of Bitcoin dailyand added:

“It may not have met the expectations of many ‘Hodler’ who, encouraged by the media excitement about halving, They expected that the event would lead to an enormous price increase for Bitcoin“”

As mentioned above, the price of Bitcoin remained stable after the event, although most experts predicted a slight decline immediately afterwards. Not only that, lThe currency’s native network hash rate also remained relatively stable.. These factors seem to have strengthened investor confidence, who claimed that, despite everything, such numbers could lead to an increase in Bitcoin’s global acceptance The current coronavirus pandemic that has struck the global economic engine for several months.

Chris Yim, co-founder and CEO of LibertyX, a US-based Bitcoin ATM, ATM and kiosk operator, told Cointelegraph that he was an active part of the retail business. You’ve learned cryptocurrency for over six years Bitcoin’s halving events cannot consistently meet all expectations::

“I am personally encouraged by the relatively low volatility this time compared to 2016. The industry has made great leaps in the past 4 years. WhatThe main risks of the last halving were eliminated (for example the failed Segwit2x fork, the lack of the “spiral of death” of the miners after the halving).“”

Does the halving force investors to wake up?

Although the halving of Bitcoin supporters worldwide is largely portrayed as a supply / demand dilemma, it should be remembered that the event does not make Bitcoin any scarcer in terms of its global supply quotient. It simply reduces the rate at which new BTCs are added to the currency’s existing supply pool. In this sense, Many investors and supporters of the traditional financial system have recognized that this deflationary model sets Bitcoin apart from the rest of the fight..

Alan Silbert, a former senior vice president at GE Capital, who is currently the CEO of Inx – a U.S.-based platform for trading regulated cryptocurrencies and tokens – found that at its core The halving served as a reminder to everyone that the Bitcoin delivery follows a mathematically linked emission program::

“”This is one of the key principles for the value of Bitcoin. This is emphasized even more in a context in which central governments print trillions of dollars without restrictions or restrictions“”

Similarly, Sidharth Sogani, founder and CEO of cryptocurrency research company Crebaco, agrees with Silbert’s assessment The halving served essentially as a good reminder of how Bitcoin differs from the traditional cryptocurrency market. He noted that while local currencies like the US dollar are being printed in large quantities, Bitcoin is seeing a decline in its active supply reserves despite the current pandemic and recession. He also added:

“”One event that I thought struck during the halving was the encrypted message at the peak of the 630,000 block, which was – NYTimes 09 / Apr / 2020 With a 2.3-ton injection, the Fed plan exceeds the 2008 bailout by far“”

Reducing mining rewards doesn’t have a negative impact on Bitcoin

After every halving, the Bitcoin ecosystem is experiencing a dramatic shock, removing less profitable miners from the industry and replacing newer players with more efficient operations. Shortly before this halving, however, many industry insiders commented that independent miners were unable to stay afloat due to reduced rewards. Bitcoin’s privacy and security can be compromised.

In this context, Checkmate, an independent cryptocurrency analyst and research contractor for Open Source Cryptocurrency Decred (DCR), believes that this is the case By reducing block rewards, the mining industry is relieved. Not only that, but also adjusting the difficulty will, in his view, ensure that mining remains profitable for some and that actors with optimal energy, hardware and capital costs continue to secure the chain as always. He also said to Cointelegraph:

“”The hash rate is expected to decreaseHowever, the hash rate does not reflect actual network security. Miners’ investment in ASIC hardware represents a significant and permanent hurdle to logistics and capital costs that must be overcome for an aggressive attack to succeed. “

Silbert shares a similar point of view and believes that the Bitcoin ecosystem has so far been a significant backbone for hashing and security – with the coin mining community performing better overall, 100 exahashes, or more than 10 trillion hashes per second A significant reduction in mining infrastructure would be required to contain the currency’s security fundamentals.

In conclusion, it should be remembered that while large operations have pushed small Bitcoin miners out of the market, new entrants such as Blockstream Mining and Pool and Binance Pool have also entered this burgeoning space to provide them, and companies are turning to plug and play mining solutions to.

Does the scenario meet expectations after halving?

Bitcoin has performed relatively well since the market crash in March, when the market’s highest cryptocurrency shrank to around $ 3,800. To get a more holistic view of whether Bitcoin was able to meet price expectations after halving it – particularly due to the Fed’s rate cut and accelerating its quantitative easing efforts – Cointelegraph contacted Josh Tate, CEO of Forum Pay, a crypto payment platform. In her opinion:

“”Reports show that the rising trend line remains intact. What we saw in mid-March when the price dropped was the final evidence of Bitcoin as a haven of value. Fast forward 2 months and BTC is currently at the top of an ascending trend line with strong support“”

Sogani also believes that in the short term after halving Bitcoin prices could approach the $ 12,000 areaEspecially since more and more countries are starting to take cryptocurrencies into account in their respective monetary policies and to recognize this new asset class as a legitimate financial instrument. Not only that, but also the fact that more and more people are viewing Bitcoin as an effective hedge against inflation underpins the fact that market confidence in BTC is increasing.

Related: Interest in Bitcoin is increasing worldwide during the COVID 19 crisis

However, it remains to be seen what the future will look like for Bitcoin, especially as another decisive moment is expected for crypto-miners in the next four days A mining difficulty level of approximately 2% is used.