The signs of the apocalypse are with us: Bitcoin (BTC) transaction rates are highest, blocking time increases, and the mempool is overloadedeverything as forecast by Zach Resnick, managing partner at Unbounded Capital.
Crushing is more likely
When Resnick spoke to Cointelegraph on May 8, he argued that the “spiral of death” scenario has no price and that the community underestimated its likelihood.. He claimed that there might only be a two to three percent chance that halving would completely end the chain, but In his opinion, the price of Bitcoin was set as if there was a zero percent chance of it. In addition, he said that a sudden big drop is more likely:
“I put at least a 10 percent chance of a sudden big drop.”
It should be noted that Resnick and his team are big supporters of Bitcoin SV (BSV) and believe that Craig Wright is Satoshi Nakamoto.
Does network activity claim Resnick?
Resnick’s argument for the death spiral went something like this. Since halving reduces the block reward, many miners leave the network. How The network hash rate decreases, the blocking time increases, the network congestion. This in turn, makes Bitcoin less attractive because participants don’t want to wait forever to process their transactions. These leads to falling Bitcoin prices, What pushes more miners out of the network. This process is repeated until the network dies.
Transaction fees and blackout period. Source: Glassnode
First, the hashrate had dropped 30% in three days. As a result, the block time interval has increased, which means fewer transactions are processed. This led to an increase in the number of transactions waiting to be processed (mempool). Bitcoin transaction fees are set based on supply and demand, and the decline in supply has led to a multiple increase in transaction fees.
Number of mempool transactions. Source: blockchain.com
Although current data can support doomsday forecasts, It is still highly unlikely that the temporary slowness of the Bitcoin network will lead to its final demise. Ultimately, price and difficulty adjustments will lead to a new balance in the network.