Are we still confident in its impact on the bitcoin price?

Key facts:
  • The halving may continue to affect the bitcoin price, although its impact has diminished.

  • Market is testing $20,000 support for Bitcoin.

Are we ready to ditch Bitcoin and believe Bitcoin (BTC) will “get to zero”? Just because he was for a few days in a field he wasn’t in yet, in a history that’s still young for a little over a decade? No, this bitcoin has defied the history of how its price behaves in every cycle after halving doesn’t worry us too much.

Let’s review a bit of history: Halving is the mechanism by which the issuance of coins in the Bitcoin network is gradually reduced. It has been written by design in the Bitcoin code since its creation by Satoshi Nakamoto. This mechanism means that every 210,000 blocks (roughly every 4 years) the amount of BTC entering circulation is halved.

This gradual reduction in the issuance of cash, combined with the limited supply of 21 million BTC that may be present, constitutes a monetary policy that is a far cry from the money we know before Bitcoin: fiat money, issued by central banks without limits. Endless money is constantly at the mercy of inflation.

Now, what does all this have to do with the price of bitcoin? For many, it has everything to do with it. The main reason A significant portion of Bitcoin’s value lies precisely in this money supply. Other factors are related to security, non-confiscation, or the freedom of trusted third parties. But in this article we focus on supply (there are bitcoins) and the demand (the people who want bitcoins).

The market in relation to the Bitcoin halving

So far, the market’s reaction to the halving has been fairly straightforward. And while not every bonus cut has yet taken place directly, In each period, new historical price highs were achieved..

Another constant associated with this behavior is that it has not returned in any cycle to its previous levels. At least, not after breaking the top of the previous cycle. So far, as it did this weekend with Bitcoin dropping below the $20,000 mark that marked the top of the 2017 bull run.

Does this mean that market cycles, hitherto pegged at the halving, have been disrupted?

not necessarily. The first thing to think about is that this fall didn’t really last long and we could consider, as analyst Scott Melker said recently, that the market is currently testing this support. It should drop below that level and stay there for a while until we really wonder if the cycle is dead..

So far, every 4 year market cycle has been marked by a new price hike ever. Source: lookintobitcoin.

Dependence curve, the other key to the future

The other is the topic that Fidelity Director Joren Timmer touched on a few days ago. The analyst suggested that the price prediction model stock flowWhich mainly depends on the rate of bitcoin issuance, also starting to take into account the approaching 21 million BTC limit.

Now, when there is only about 10% of the trade entry limit left, the effect of the halving on price should be less. In his opinion, this will make the price increases per cycle more moderate. And I share this vision, because The closer we get, the more important adoption becomes Bitcoin issuance rate.

The adoption curve is another aspect that is widely considered a factor in the long-term appreciation of Bitcoin. There are models comparing Bitcoin adoption with other technological innovations and suggesting that the cryptocurrency appreciation process is still in its infancy.

If so, and if we cross this data with the fact that the increase in the Bitcoin cash block will be less and less, It doesn’t seem unreasonable to be optimistic about the future. Will it hit $500,000, $1,000,000 or more? hard to say. But the idea that bitcoin is in crisis now, having lost support from the “halving effect” for a few days, sounds like an illusion that shouldn’t haunt any bitcoin’s mind. This sounds like haters like Peter Schiff.

 

 

 

 

 

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