There were expectations among the cryptocurrency community ahead of the recent Bitcoin halving event. A lot of participants who looked out for an upside breakout in the price of Bitcoin were disappointed. Perhaps, this singular scenario provides for the difference between the experts and mere speculators in the industry. There are also those who think that the pioneer cryptocurrency has entered into another phase in its developmental cycle.
Shortly after the Bitcoin halving event, Bitcoin price took a tumble, causing a lot of speculators to lose money. Those whose stop-loss orders were relatively tight were kicked out of the market, while some closed their losing positions out of panic. At the time of writing, the market appears to still be struggling to find a proper direction. Therefore, the prevailing question in the community now is – “Where does Bitcoin go from here?”
We Are Yet To Know The Full Impact of Bitcoin Halving
The CEO of the Bitcoin ATM Coinstream, Micheal Vogel acknoledged the excitment among many Bitcoin users ahead of the halving event. According to him, it seemed to carry much more buzz than the 2016 event. However, he believes that as it is with pretty much all aspects of Bitcoin, “time will tell” what impact this halving will have on the price over the next year. “Regardless, it was an exciting historical moment to witness – especially with the rally in the weeks leading up to it”, he says.
Bitcoin is not built on vacuum, at the same time, it is not reliant on some traditional political decisions like fiat currencies. On the contrary, Bitcoin is built on a tangible technology whose protocol is decentralised and responds to the actions of its community. In other words, what becomes of Bitcoin depends fully on the outcome of the technology surrounding it, and the market activity among participants.
Vogel notes that the fundamental changes in Bitcoin post-halving are clear in terms of mining rewards and the price point needed to make a profit mining Bitcoin. He explains that in the short term, Bitcoin miners could have an impact on the price of Bitcoin based on whether they hold onto newly minted coins, or whether they flood the market by selling off these coins. Perhaps, this is a factor that any participant willing to speculate on Bitcoin price will need to consider – what are the miners doing at this time?
How Bitcoin Halving is Affecting the Ecosystem
It is important to remember that one of the fallouts of the Bitcoin halving event is the increase in mining difficulty. In simple terms, this means that the rate at which new Bitcoins are introduced into the network has been reduced by 50%. This also implies that the competition for mining increases exponentially, making every Bitcoin mined to be more precious. Especially as the cost of mining has become higher. This and other factors, over the years have prescribed an expectation for the price of Bitcoin to go up. How and when this will play out is what the fans of Bitcoin always try to figure out. Especially the speculators who try to make money from the swings in the market direction.
Vogel explains that in terms of the progression of Bitcoin since the previous halving in 2016, there has certainly been a shift in terms of Bitcoin being viewed much more as a “digital gold” and store-of-value, versus a new payment method. “In 2020, Bitcoin fans see cryptocurrency taking root as a serious alternative and hedging investment, very similar to gold, he says. “What remains to be seen in the long term is how Bitcoin rallies and bear markets trend with gold and Wall Street stock indices.”
As the big brother of the cryptocurrency ecosystem, Bitcoin has continued to play the role of a leader to other cryptos. Clearly, the entire cryptocurrency market almost always goes the way of Bitcoin. This has been the pattern for the past couple of years, and nothing seems to be changing that any time soon.
The Effect of MIners on the Crypto Economy
While the fans of Bitcoin are paying close attention to developments within the Bitcoin community, other altcoin communities are also taking dressing. Perhaps, there are those that are already aiming to take over the role of the payment method that is being relinquished by Bitcoin. All of this is working out to establish the digital economy, which is expected to play a key role in the emerging new world order.
As already mentioned above, among several other factors, the role of miners will be quite significant towards the next phase of Bitcoin evolution, and that of the entire cryptocurrency market. How the more precious newly mined Bitcoins will be handled will have a direct impact on the economic indices of demand and supply in the marketplace. This will surely have an impact on how participants in the marketplace would respond, and consequently on how Bitcoin price develops.
Vogel concludes by noting that it is of course impossible to predict where Bitcoin will be priced next year, however we can look to the past two halving events and see how they ultimately led to Bitcoin “leveling up” and establishing a new price floor. Everyone holding Bitcoin now is definitely hoping for a repeat this time around!
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.