For over a month, the global crypto community has been talking enthusiastically about the upcoming halving of Bitcoin. However, due to the economic crisis that has affected the entire planet at this point due to the spread of the new corona virus, this appears to be the case This halving may not have as much of an impact on the value of the main cryptocurrency compared to previous fluctuations.
Despite the fact that many traditional assets, such as oil and stocks, have suffered a sharp decline in value since early March, Bitcoin (BTC) appears to be experiencing a strong wave before the upward momentum was halved, which has helped The digital flagship to exceed 7,500 over two weeks US dollars remain. Not only that, but also Bitcoin hit another relative high on April 29 as it rose to around $ 8,900, and traders are still pushing for a break to keep the currency above the important $ 8,000 threshold forever.
However, many cryptocurrency analysts such as Micheal van de Poppe believe that Bitcoin will find it quite difficult to maintain its current upward trend and maintain a $ 8,000 or $ 8,500 barrier cut. In his opinion: “Events such as halving could trigger an increase in the FOMO level. […] However, as soon as people realize that the event has no short-term impact, the selling pressure will also be strong.“”
The impact on the hash rate is still very uncertain
In addition to its price, the upcoming halving is likely to have a direct impact on other aspects of Bitcoin, such as: B. the hash rate of the currency. To better understand the matter, Cointelegraph contacted Tim Rainey, CFO of Greenidge Generation, a New York-based power plant that also operates in Bitcoin mining. In her opinion If Bitcoin’s price remains constant after halving, another temporary decline in the hash rate, similar to March, could be in sight.. Rainey added:
“As the miners of the last old generation go offline and the new mining operations that are driven by the rainy season in Sichuan go online. However, we only use the latest generation of mining hardware and have considered several possible scenarios in our business plans in case that the halving deviates from expectations. “
Wayne Chen, CEO of Interlapse Technologies – a financial technology company that wants to promote the adoption of digital currencies – told Cointelegraph In the weeks before and after halving, intermittent and wild fluctuations in Bitcoin’s native hash rate can be observed. However, due to the fact that Bitcoin has gained more value and reputation since its previous halving – and has maintained its successful dominance across the cryptocurrency market as a whole – the coin’s hash rate is expected to continue to increase for the rest of 2020 .
Historically, it’s clear that Bitcoin’s hash rate has increased significantly after the last two halves. This time, however, the scenario has changed significantly. For example Investors are now more familiar with Bitcoin, which was definitely not the case to a lesser extent in 2012 and 2016. In this context, José Llisterri, co-founder of the crypto derivatives exchange Interdax, told Cointelegraph:
“Participants are better informed about Bitcoin and the hash rate is likely fall immediately after the event, as we saw at Bitcoin Cash and Bitcoin SV, which previously had their halves. The decline in the hash rate is due to the inefficient miners;; The cost will be too high to continue working as the block reward halves. “
In addition, Llisterri found that Bitcoin’s hash rate will most likely recover after an impending downturn, as efficient miners will find a way to reinstate their operations when mining levels of difficulty reset.
Related: Bitcoin reaches $ 8,000 and clears the coronavirus crash: 13 days before halving
The effects of halving on the Crypto Fear Greed Index
On Monday, Bitcoin bulls around the world had reason to celebrate when the Crypto Fear Greed Index – a measure of psychological instability in the cryptocurrency market – came out of their lowest possible reading of “extreme fear” after a total of seven long weeks. More specifically, the Crypto Fear Greed Index is based on six core components: volatility, market dynamics and volume, social activity, surveys, bitcoin dominance and a Google Trends analysis.
Taking this into account, halving will likely increase the volatility of Bitcoin’s total prices in the coming months and will most likely negatively impact the index. However, Llisterri believes that eThe event will have a positive impact on the dynamics of the Bitcoin market, noise on social networks and overall reputation, as it will help the currency attract a lot of media attention and expose a whole new layer of investors:
“The event could Generate optimism among dealers. Trading volume increased by 50% to 150% in the months before the previous reductions, but the volume increase only continued after the halving in 2012. In 2016, the volume started to decrease in July, the month of halving, and started increasing only three months later. This time We saw a solid increase in trading volume, with March having the highest monthly volume since July 2019“”
Bitcoin’s domain index rose from around 50% in early 2019 to around 65% today, while the market share of the second largest cryptocurrency on the market, Ether (ETH), has remained stable at 7-10% over the same period. The way things are There is no reason to believe that halving will negatively impact Bitcoin’s domain index.
Matthew Ficke, head of market development for the cryptocurrency platform OKCoin, gave Cointelegraph an insight into the matter Your company’s research data seems to indicate that the next halving has already been included in the total price of Bitcoin.and therefore there is no real reason to believe that the Crypto Fear Greed Index will diverge from its current position due to the halving of Bitcoin. Ficke then added:
“Another signal we are considering to measure market sentiment is buying and selling activity on our stock exchange. Trading activity in crypto and traditional markets has led to volatility and increased trading in recent weeks. What is difficult to determine is how much of it with halving (and FOMO) Bitcoin vs. the market reaction due to COVID. “
The mood on social media seems optimistic
Since the media hype replayed the next halving, it has managed to grab the attention of the masses worldwide, which shows that most of the sentiment about Bitcoin is coming from the main social networks – especially Twitter. radiate optimism.
In this context, Mohanned Halawani, the founder of the crypto PR marketing company, told Cointelegraph that it’s pretty clear that both Bitcoin traders and Hodlers sit on what you see online about what the halving event said the edge of their seats in anticipation of another bullish scenario and add: “Overall, the excitement about cutting Bitcoin in half has exceeded all expectations“”
A similar view is shared by Ficke, who added that by using Google’s search volume data in conjunction with keyword data collected using OkCoin’s social analytics tools, it is clear that there is great anticipation for the event. Kenneth Yeo, CEO of Sparrow – a Singapore-based options trading platform – believes that the general consensus about the halving was quite positive: “The mindset of most people at the moment is – reduced supply, increased demand“”
Related: It’s already less than two weeks away, and some experts warn that bitcoin halving could end with no noticeable impact
However, in Chen’s experience, discussions on the social media about the event were neutral or slightly disappointing. However, he found that halving Bitcoin was historically very banal both before and after the event. Chen also said:
“Everyone has the expectation of a price increase at a later date. With the Covid 19 pandemic as an additional disadvantage for the global economy We can see a bullish signal faster than with previous halving“”
I look forward to it
Although most cryptocurrency experts are currently very concerned about the price aspect of Bitcoin, it appears that the next halving will also occur can lead to increased criminal activity on the asset as the value of many first order crypto assets is expected to increase after the event.
Alex Heid, the research director of SecurityScorecard, an information security company that assesses corporate cyber security risks, told Cointelegraph:
“”Ransomware attacks increase due to halvingKnown vulnerabilities and phishing are likely to be used as a means of delivery. Financial crime software traditionally targeted at banks will target the exchange of cryptocurrencies with increasing speed“”