Bitcoin’s “halving” is completed, where will the future market go?

At 3:23 a.m. on May 12, Bitcoin finally completed the reward halving at a height of 630,000 blocks. This halving means that Bitcoin’s block reward will change from 12.5 to 6.25 in the future, and the daily output will be lower than the current 1800.

It needs to be reiterated that the “halving” here does not mean that the number of bitcoins is reduced by half, but that the bitcoin mining rewards are reduced by half.

Block rewards have become fewer, with the mining industry bearing the brunt. Some people think that the bitcoin price will not double in a short period of time, and a super-mining disaster will occur. Others say that the old mining machine accounts for a small proportion and is currently in a period of abundant water, which will not cause a mining accident.

Many other investors used historical data to prove that Bitcoin’s halving was a catalyst for the bull market. However, three days before the halving, Bitcoin fell from the height of tens of thousands of dollars, which made investors have doubts about this conclusion.

Will this halving bring mine disaster? What will happen to the market outlook after halving? In the context of the global economic recession, will the bull market people expect to come as scheduled?

Mining shuffle

Mining rewards become less, directly related to the output of miners.

Lai Bite mineral pool, founder of River Thatcher was in Mars Finance said in an interview ” revenue will eliminate a number of small miners in half, but limited impact on the big miners. After the half, and the count will not cause stress concentration, but Towards mining specialization. “

The withdrawal of small miners will directly affect the development of mining machine manufacturers. 

According to Yibang International ’s prospectus submitted to the US Securities and Exchange Commission (SEC) on April 24, Yibang International ’s revenue is divided into two parts: bitcoin mining machine sales and custody business, of which mining machine sales account for the bulk. In 2018 and 2019, the sales of Yibang International’s bitcoin mining machines and related accessories accounted for 96.3% and 82.4% of revenue respectively; while the revenue of miner hosting services accounted for only 2.4% and 14.4%, so Yibang International, etc. The development of mining machine manufacturers will be constrained by the reshuffle of the mining industry.

In addition, the price of Bitcoin will affect the sales and prices of mining machines. According to Yibang International Prospectus, from December 31 2017 to December 31, 2018, the bitcoin price dropped from about US $ 12,619 to about US $ 3,859; January 1st, 2019 to December 31st, 2019. The currency price dropped from a maximum of 12,806 dollars to a minimum of 3,373 dollars. Affected by the plunge in bitcoin prices, the sales and prices of bitcoin mining machines dropped sharply in 2018 and the first quarter of 2019.

640Yibang International’s 2018/2019 mining machine sales and price changes

In this regard, Yibang International pointed out in the prospectus that if the Bitcoin mining machine market no longer exists or is significantly reduced, the company’s Bitcoin mining machine will suffer significant sales losses, order cancellations or customer loss, resulting in further operating performance and Adverse effects on the financial situation. 

Fortunately, the advent of the flood season and cheap hydropower have given S9 and other high-power mining machines that were originally out of the market a first-line life.

At present, the price of hydropower in self-operated mines is about 1.5 gross / degree, and the price of custody is about 2 gross / degree Compared with the thermal power price calculation of 3.6 ~ 3.8 gross , the decrease is not small.

If the dry season comes, as long as the price of Bitcoin rises, the lifeline of mining machines such as S9 that should have been eliminated will be extended.

In other words, whether the super-mining disaster will come will have to be discussed after the flood season. But Bitcoin’s deflation is destined to make Bitcoin mining a shrinking industry.

Before the halving, the price went up and down. How about after the halving?

640-1Looking at the 24-hour candle before and after halving , Bitcoin is in a shocking roller coaster market. On the eve of the halving, at 8 pm on May 11, Bitcoin reached a maximum of $ 9176. Less than six hours later, Bitcoin then fell to around $ 8,196, a drop of nearly $ 1,000.

In addition, on May 10, two days before the halving , when the public was still immersed in the joy of “bitcoin halved, bitcoin broke ten thousand”, the market unexpectedly gave investors a heavy blow. From around $ 9,500, it fell to around $ 8,100.

Regarding the sharp rise and fall before the halving and the subsequent market trends, industry insiders told Ruisi Finance, “The decline in the last two days is because part of the profit has fled . Compared with the price at 3.12, the current rebound of Bitcoin is strong. , And there has been no large-scale pullback, and one reason is also because the halving is approaching, and funds choose to hedge to avoid the high volatility before the market halves. Bitcoin may be a volatile trend in the second half of the year, and there may be a Nice market. “

“Kye” director of investment research at OKEx , believes that “we are currently in the short-term hot-spot period. The market is over-focusing on production cuts, investor sentiment is easily mobilized, and price volatility is gradually increasing, resulting in a short-term bubble blowing market With production cuts The event is approaching ebb tide, short-term speculative sentiment is declining, speculative funds are withdrawn, and the short-term bubble will eventually burst. 

Qiye, CEO of Huobi Global, said that in the short term, the probability of predicting the price of Bitcoin rises or falls, and the probability of guessing is about the same as the size of the bet, because its determinants are multi-factors. The market halving this time can also be seen as very different, and no one can see the whole picture in God mode.In the long run, Bitcoin’s rise has formed a larger consensus, and the core comes from its deflation model with halving as the core mechanism. As the number of Bitcoins does not increase or even decreases, and there are more and more people who know Bitcoin and hold Bitcoins, the continuous expansion of consensus will inevitably lead to a long-term bullish value.

As of press time, Bitcoin quoted US $ 8,739, a 1.3% increase in 24 hours .

Halve and bull market

Bitcoin’s constant total is 21 million, and more than 18 million have been dug up. Block reward halving means that it will take longer for all bitcoins to be mined and put into circulation. Therefore, the Bitcoin “halving” incident has been regarded as a catalyst for a new bull market in the industry.

From the past two “halving” points :

On November 28, 2012, when Bitcoin completed its first “halving”, the price was about $ 12, and the price soared nearly 100 times in the following year, and it exceeded $ 1,000 at the end of November 2013.

When the second “halving” was completed on July 10, 2016, the price of Bitcoin was about $ 650. Until one and a half years later, on December 17, 2017, the bitcoin price exceeded 20,000 US dollars, rushing to the highest peak.


Will history really repeat itself?

The attitude of many analysts is negative.

OKEx Research principal investigator William compared the difference in halving several times and found that “From the motivations of the previous two bull markets, everyone only saw the halving itself, but ignored another deep logic. From every cycle of Bitcoin, we have It can be observed that innovation is promoted in it, such as the birth of Bitcoin exchange in the first cycle, the birth of many altcoins in the second cycle, and the birth of the ICO financing model in the third cycle. The price of Bitcoin soared that year. “

“So I think that what really drives the bull market for cryptocurrencies is the next round of innovation, not the simple market maturity, the amount of funds and the structure of currency holders.For example, many people expect traditional funds to enter the market to promote the Bitcoin bull market, but only when the market is in compliance, huge amounts of money in the traditional financial market will enter, which requires regulatory innovation. “

In addition, some analysts mentioned that “halving” is just halving the newly added amount of Bitcoin. The total supply is still increasing, but the speed is slowing down. The number of Bitcoins in circulation tomorrow will still be more than today, so it is very It’s hard to imagine that this “halving” can push up the price of Bitcoin.

Ruisi Finance previously discussed in an interview with HKDT President Xu Fei that the coming of the bull market has several signs: First, most of the air projects in the market have died; The core of no; three, whether the funding is ample; fourth, the introduction and gradual improvement of policies and regulations; fifth, a certain period of time.

The global central bank’s water release, asset shortage and halving are positive, which makes Bitcoin rise for a short time, but it does not mean that these can constitute a bull market. Under the influence of the covid-19 epidemic “Black Swan”, under the pressure of the global economy and the market, the future trend of Bitcoin may be more difficult to predict.

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