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Though Bitcoin (BTC) is experiencing its worst sell-off in the last 7 years, the smart money is preparing for a golden bull run after the next halving that is said to happen in 43 days.
While coronavirus is raging all over the world, investors are wondering what will happen to Bitcoin and altcoins, especially after BTC halving. We all already know that halving is happening soon but let’s start from the beginning. As part of Bitcoin issuance, miners are rewarded a certain amount of Bitcoins whenever a block is produced (approximately every 10 minutes).
When Bitcoin first started, 50 Bitcoins per block were given as a reward to miners. After every 210,000 blocks are mined (approximately every 4 years), the block reward halves and will keep on halving until the block reward per block becomes 0 (approximately by the year of 2140). As of now, the block reward is 12.5 coins per block and will decrease to 6.25 coins per block post halving.
BTC Created as Deflationary Currency
So, we should explain why this is happening. Bitcoin was designed at first as a deflationary currency. That means that the original thinking was that during some time, issuance of BTC will decrease and therefore it will become more deficient, more limited – something like gold.
As it becomes more limited and if demand rises, the crypto can be used as a hedge against inflation because the price could only go up. On the other side, fiat currencies (like the USD or the euro) inflate over time because the government is printing more money (that can be seen in times like these where the term ‘helicopter money’ became almost a regular thing).
Jihan Wu Is Optimistic about Bitcoin (BTC) Performance
Jihan Wu, the co-founder and chief executive of mining rig manufacturer Bitmain, says he’s optimistic that Bitcoin (BTC) can perform well this year in spite of the coronavirus outbreak.
Wu added central banks’ tryings to fight the impact of the pandemic through bailouts and loose monetary policies could drive the price of all financial assets higher.
Let’s also not forget one more important thing – a hash rate. Following the market massacre in mid-March, BTC hash rate rose by 44% to a 2020 low of 75 exahash per second (EH/s). Since then the hashrate has climbed back above 100EH/s, but profitability between SHA256 networks like BCH and BSV has been a lot more volatile than usual. Also, we shouldn’t forget that nowadays we have ‘three types of BTC.’
At the time of writing, Bitcoin SV (BSV) miners had 2.4EH/s of hash power and the network is expected to halve in ten days. Bitcoin cash (BCH) has around 3.4EH/s hashing away at the network and BCH miners will face a halving in eight days. All three networks have been seeing much longer time frames when it comes to miners shifting between networks for profits on each network.
Still Not the Time for Bulls
The price of Bitcoin (BTC) retraced to $5,800 over the weekend, and at the time of writing, it stood at $6,395 rising by 1.28%.
However, we still not think bull’s thoughts are going to be positive still. The price of Bitcoin is still in a bearish momentum until the price can reclaim its previous support at $6,800–$6,900. However, such a move hasn’t occurred in the past week. But, that doesn’t necessarily means bad thing.
People got 162 days to buy in the buy zone last time. I wonder how many days they'll get this time…. pic.twitter.com/KzRz4Mh8AH
— dave the wave (@davthewave) March 30, 2020
Per a seasoned trader and analyst, Dave The wave, Bitcoin price will escape the Buys zone in a 5-month window. Buy zones exist within every cycle of Bitcoin indicating the best time to buy the asset. Last time this buying window happened was in November of 2018 till May of 2019, a total of 162 days, hence included the 2 year low of the last days of December.