Binance CEO and Founder shares a Crypto Market PredictionFebruary 25, 2020
Bitcoin cryptocurrency, along with the rest of the broader crypto market, has seen an amazing start of the year. The BTC price rallied for around 50 percent in the previous several weeks, starting with January 1. Other altcoins did as good or even better, with some gaining surprise movements up in triple-digit percentages.
Now, many bitcoin bulls are sure that there is still a lot further to go if the stars align. However, there are also many who point, including some of the same bulls, that there are potential problems on the horizon, especially of new records. Of course, like it usually happens in the crypto space, the amount of opinions and projections is never on the low end.
However, a voice that is not often heard in the crypto media is sharing his ideas in the near future of the markets. He is Changpeng Zhao, the CEO and founder of Binance, the biggest crypto exchange market in the world. Zhao otherwise has a rule about not giving any predictions but he has now broken it. Thanks to that, the world knows that Zhao believes that the bitcoin price will most likely increase in the coming period.
Changpeng Zhao Ideas
There is no need to explain that Changpeng Zhao wields a significant amount of influence and respect in the crypto domain. He is the man behind the biggest cryptocurrency exchange in the world but still someone who is more than hesitant to talk about the future movements on the market. Now, he stated that he believes that the price of bitcoin will very likely increase.
This makes him bullish on the prospect of BTC but he also has some additional ideas that carry weight in this price rise process. Zhao said that he thinks that the halving factor has not been fully priced in. Previously, he said that anyone who gives market prediction can often be wrong half the time. In this case, however, Zhao or CZ as he is known, believes that the moment when the mining difficulty goes up this year will significantly influence the BTC price.
Of course, Zhao is not implying that no one is aware that halving is coming. Some bitcoin investors and traders are already in the process of gearing up for the halving event. This process will take place on the bitcoin network coming may and it represents a positive BTC price development. This means that those same traders and investors are stocking up on BTC tokens while the price is still perceived low, but at the same time, they are following its movements between now and the key moment after a successful halving has been completed.
Once that happens, there will be big practical changes to the network and the supply of bitcoin. Instead of rewarding miners with a 12.5 BTC per mined block, they will not attain half of that, meaning 6.25. In the present financial and tech environment, the idea of scarcity is not as straightforward as it might be in the regular markets. In the domains like esports or cryptocurrencies, figuring out what is scarce and what is not does not include an intuitive basis. However, in spite of that, there is little doubt that scarcity and its essential perception by the markets and their participants does play a huge role in defining the price of any venture. Bitcoin is nothing different in this regard.
Perception and Pricing In
The notion of pricing in the halving process is not a historical unknown. So far, there have been two halvings since the network went live more than a decade ago. The first took place in 2012 and the second one four years later. Now, a new one is expected based on a pre-set schedule which roughly takes place according to the network fundamental blueprint and using four-year intervals. This will keep on happening until the network hard cap of 21 million mined bitcoins is generated.
However, that should not occur in the 21st century even though things like quantum computing technology opens the possibility of messing up that tidy plan of Satoshi Nakamoto. Now, analysts are wondering whether or not most investors have actually priced in the May halving and to what degree do they think it is relevant. However, this is a dilemma that can be put before any trader or investor in any market, traditional or digital. Still, there is a level of certainty that the very nature of crypto makes for a space where investors and traders are generally less informed than in traditional domains of equities, currencies, and commodities. CZ believes that this factor is actually a benefit when it comes to crypto markets.
Changpeng Zhao believes that the market is nowhere near efficient in its current form. This means that most people are not well informed and that they do not gather information quickly. Instead, even though active in the market, they will regularly need plenty of time to develop their mindset around new concepts and let things sink in.
He warned that taking history literally in this case likely will not produce valid stances as the past of the crypto ecosystem is neither long or full of definable patterns. Yet, he also points out that halving is a really clear-cut concept that will see miners getting a doubling of their costs. If nothing else, the same miners will not be willing to sell tokens below a certain price. Of course, this would hurt or even shut down mines that cannot handle the dry spell, but these would not be the major mining pools.
These are likely already finding financial backing that would help them if the price of bitcoin sinks too low after the 2020 halving. When all of this is taken into consideration, it is clear that CZ does have a valid point. The safe money is on the possibility of bitcoin launching up after the halving of this year. The problem is that this period can last anything between a few days and many months. In that period, there is no way of telling when the ceiling will be found and will it be a record-setting one.