Industry News The Post-Halving Effect on the BTC Price

The Post-Halving Effect on the BTC Price

July 19, 2016

Halving MoonAlmost two weeks after the event which saw the reward for BitCoin mining cut in half on 9th July, the community and the world are waiting to see the results of this event. From one perspective, the halving is a completely expected event that was literally embedded into the main core of the BitCoin network. In this regard, the world of the BTC currency had plenty of time to prepare and companies could figure out their strategies without any pressure of a changing market.

But, from a different perspective, there is no denying that halving is an extraordinary occasion which took place only one so far in 2012. Additionally, the global financial, political and economic outlook is exceedingly volatile in many places, including the big regional centers. In this type of an environment, it is no wonder that many in the BitCoin community wished that the halving could be somehow postponed until a calmer period came about.

No postponement took place and on July 9, the revenue that miners attain from a single mined block of data was split from 25 to 12.5 BTC. In the immediate aftermath, there were no tectonic shifts in the BitCoin domain, but the community is still really keen on trying to understand where the market will move next when it comes to the price of BTC. Here are some of the most relevant predictions regarding the same question.

An Easing of Tension

Even though the BitCoin community tried to put on a brave face when it comes to halving, with many people in the world attending numerous halving parties, the event was still a huge source of anxiety and fear. This occurred mainly with the investors, who would be the first to feel the impact of any sharp drop in the price of BTC. But, aside from the investors, the developers as well had their apprehensions. Naturally, the individual users who attain BTC to use as remittance, purchase goods or employ BitCoin to bet online also tried to find out what can be expected in the immediate future.

But, once the first week after the halving had passed, all could see that the danger of huge turmoil has passed as well. On the day of the halving, the BTC price fell by around 6%, which is very modest when it comes to other drastic losses in value that took place in the last 5 years. That is why, on 9th July, the BTC price was $626, but did not experience any further drop.

In the days after the event, the price remained stable in its regular pre-halving parameters. Soon, however, the price was once again on the march up, gradually attaining $668 and showing no sign of stopping.

In this regard, many believe that the overall trend from 2016 will continue in spite of the halving. This means that the elevation of the BTC price will continue, but the tempo and the dynamic of this process are open to debate.

Type of Price Climb

Joe Lee, who is a CIO and co-founder of Magnr, a platform for trading digital currency, expects what he describes as a steady and slow rise in the BTC price which will represent a new level of confidence in the overall system. In his view, the halving is a representation of a new step in blockchain maturity which clearly presents its inherent stability.

Lee also believes that the gains will come about once all those who were reluctant to invest in this digital currency now finally decide to enter its domain. In many ways, according to Lee, the halving will not just safeguard the current BTC price, but actually, elevate it by demonstrating a solid practice of a well-functioning system.

Arthur Hayes from BitMEX, a leverage BTC trading platform, went even further and called out the potential gains that the BitCoin will attain because of a series of macroeconomic issues that came about in the same period. In his view, China’s dealings related to its currency and the Brexit drove a lot of the activity where BTC got purchased by concerned investors.

Hayes also believes that BTC could see additional upside moves because of the BOJ (Bank of Japan) monetary stimulus. This will come as BOJ goes for the monetary easing, in which case the somewhat weaker yen could push BitCoin gains even more. In his view, if the BOJ takes up Ben Bernanke’s suggestions and monetizes Abe’s fiscal stimulus, the global markets will be flooded with fresh money.

The Block Size Debate

Another additional benefit of the smooth halving process is its impact on the block size debate. With one event successfully resolved, many are hoping that the issue of each BitCoin transaction block having a maximum limit of 1 MB will be resolved. Currently, many believe that the same feature limits any big rates of consumer adoption. Here, Kong Gao, who is a marketing manager at Richfun, a BTC trading platform, believes that this issue is not as prominent as many people believe.

In his view, the scaling will not resolve the issue, just postpone the real decision further down the road. Gao instead believes that making the BTC blocks function more efficiently will provide the need resolution.

Now, the investors and all parties are trying to gauge the growth of the network and how this issue might affect it. For now, there are two clear opposing camps that provide different potential solutions. Until recently, they have been seen as completely incompatible, but with a successful halving, there are new hopes the same atmosphere could be translated to the wider community.

Leverage Trading

In all domains of digital activity, from e-government to E-Sports, even simple things can sometimes get somewhat more complicated by an additional factor. With halving, another one of these factors that could impact the BTC price is the speculative leveraged trading. Petar Zivkovski, who is the Whaleclub’s director of operations, thinks that the market activity dropped since the halving.

But, in spite of this, Zivkovski sees the recent speculative bets as mostly bullish moves. In his view, the long-short positions apparently stabilized at about 70% of the in favor of the long, but most of these took place before the halving event.

He emphasizes that the same residual longs should need to be closed in one way or another. All this means that the short-term BTC price changes might not have a clear upward path, the analysts and experts have little doubt that a definite upward momentum is currently on the table for a long-term development. The same should provide almost everyone in the BitCoin network with plenty to look forward to in 2017 as well.

Source: CoinDesk