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Given the proximity of the third bisection of Bitcoin, the Messari analysis platform provided several theses to help understand this planned event. It underlines the role of Bitcoin’s monetary policy in a context determined by the constant spending of funds by central banks. It also highlights the idea that Bitcoin is “now part of public awareness”.
The report released by Messari on May 6 describes the impact of bitcoin halving on the mining economy. “Without a 100% price increase to offset the reduction in emissions, miners’ incomes will be significantly affected,” the text said.
This scenario indicates that the current increase in Hash rate Bitcoin won’t necessarily stay long-term. Miners need to consider the cost of maintaining inefficient equipment. It is estimated that after halving bitcoin, many miners will turn off some of their machines.
According to Messari, this could mean a greater vulnerability to a 51% attack. Although a reduction in Hash rate below the level of June 2019.
In addition, according to Messari, Bitcoin could become increasingly dependent on transaction fees, “a long-term challenge”. In CryptoNews you can easily calculate transaction fees.
The story of digital gold
Messari’s CEO Ryan Silkins believes the halving represents an “official reduction” in Bitcoin’s monetary expansion below the Fed’s 2% inflation expectation.
Selkis thinks he’s “exaggerating” about it, but he believes that “narrative reinforcement is what” “Bitcoin is now less inflationary than the Fed” It’s a turning point that marks the evolution of Bitcoin from beta to production as real digital gold. “And this could be a gateway for institutional investors looking to enter the cryptocurrency market.
To some extent, however, Ryan Watkins sees the halving as “a marketing event that takes place every four years and in which Bitcoin reminds the world of its superior properties”. It believes that as the money regimes for fiat money inflate at historic interest rates, Bitcoin is adjusting its money issuance rate to parity with gold. New investors attracted by this situation and halving the emission seem to be a “bullish catalyst”.
However, Watkins does not fully agree with this perspective. He believes that the crisis caused by the corona virus is still having a huge impact and that Bitcoin is not completely decoupled from traditional exchanges and markets.
Demand drives the price, not the supply
Jack Purdy also disagrees with the tale that reducing bitcoin emissions will dominate the bull market. He believes that the only factor that could increase the price of a product with a completely inelastic supply is an increase in demand«. However, other analyzes speculate that the price could drop in the short term.
Other analysts agree on this. The halving itself isn’t that interesting, argues Qiao Wang, Messari’s product manager. “The fact that the halving is done in a predictable and verifiable way is the real innovation.”.
For his part, Ryan Selkis recognizes the power of marketing in connection with price increases in an economy characterized by a policy of supply reduction. Use the case of events like consensus as an example. He argues that if the ticket revenue doubles six weeks before the event, you can forecast the final numbers. “In Crypto, I can tell you that the doubling date is closer to 3.5 weeks in advance and is causing panic,” writes the CEO. The doubling date can be further extended by marketing the artificial defect and the upcoming price increases. “I see a similar halving: as a crypto super cycle marketing event that will rise northward as the price rises ».
Wilson Withiam sees the halving of Bitcoin as a reminder of the work that needs to be done to ensure the long-term longevity of Bitcoin. In addition, Eric Turner adds that the halving shows that Bitcoin works and demonstrates its ability to “drive a defined monetary policy without centralized coordination, which makes it interesting and an important novelty in today’s world”.
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