Bitcoin Halving: A New Class Of Bitcoin Millionaires May Emerge
The photo shows a physical imitation of a Bitcoin in Dortmund, western Germany, on January 27, 2020. … [+] (Photo by INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images)
Crypto investors and hodlers alike are sitting on the edge of their seats, waiting to see what unfolds with the highly anticipated bitcoin halving event that is scheduled to take place mid-May.
Since bitcoin’s inception in 2009, the halving (also known as halvening), is an event that takes place roughly every 4 years. During the halving, block rewards are cut in half, which in turn, limits the supply of bitcoins.
Michael Dubrovsky, cofounder of the mining company PoWx puts sheds light as to how the bitcoin halving impacts price, “The theory is that there will be less bitcoin available to buy if miners have less to sell.” So, from a supply-demand perspective:
- If bitcoin supply decreases and the demand for bitcoin stays the same, then the price of bitcoin will increase.
- If bitcoin supply decreases and the demand for bitcoin increases (ie. Institutional investors, millennials, or boomers, etc. looking to capitalize on the hype increases), then the price of bitcoin will see a significant increase in price.
Bitcoin halving historical performance
To date, there have only been 2 bitcoin halvings. From a historical perspective, during previous bitcoin halvings, each time the price of bitcoin has reached all-time new highs:
- On November 28th, 2012, the first bitcoin halving occurred, which saw the price of bitcoin increase from $11 to $1,000 around a year later.
- During July 2016, the second halving took place and the price of bitcoin was trading at around $700, and in 2017, the price skyrocketed to $20,000.
More bitcoin millionaires may materialize
During the previous 2 bitcoin halvings, countless millionaires were created. J.R. Forsyth, the founder of Onfo was one of them. He was studying mathematics as an undergraduate and was exposed to bitcoin and digital ledger technology.
Forsyth says, “It became obvious to me that math-based currencies (like bitcoin) would eventually supplant sovereign notes. I mined bitcoin and litecoin very early on and held onto them. The massive appreciation of those assets allowed me to invest in other cryptocurrency technology which ultimately led to the development of Onfo, a platform that helps people earn money through network mining.”
Or take Alan Glanse, charity founder and CEO of the cannabis business JuicyFields for instance. During his Wall Street days, he bought 100 bitcoins from a colleague that urgently needed money in 2012. Then, he forgot about his bitcoin. It wasn’t until the parabolic price highs of 2017’s second bitcoin halving, that he realized that he had become an instant millionaire.
Glanse believes that the stimulus package will only strengthen the US economy and substantial market growth can be witnessed 2-3 months after the bitcoin halving event.
The Federal Reserve
The Fed’s balance sheet is expected to exceed $6.5 trillion this year, with never seen before levels of money printing. In retrospect, that represents an increase of more than $2 trillion in under 6 weeks.
Todd Crossland, CEO of CoinZoom says that “While I applaud and support the government in taking the most aggressive measures in providing stimulus for the economy, just the magnitude of the stimulus and printing of dollars, and the accompanying debt gives me a reason to pause. The stimulus will come with inflation and subsequently pressure on the value of the dollar. In my opinion, this paints another bull case for bitcoin and digital assets.”
Right now, the world is undergoing a major financial shift. During the black swan stock market crash of March 2020, investors dropped stocks for cash, resulting in a liquidity crunch. The price of bitcoin and other digital crypto assets took a temporary nosedive. Since then, bitcoin has fully recovered, along with most other crypto assets. That said, if the Fed’s stimulus plan results in deflation, then followed shortly after by hyperinflation, this could paint a very bullish scenario for bitcoin.
A massive shift in wealth
Billionaire investor and founder of Bridgewater Associates, Ray Dalio, believes that in the near future, there could be a massive shift of wealth. Many in the crypto community have taken this to imply that cryptocurrencies like bitcoin are the solution to which Dalio speaks of. If that’s the case, then a new class of millionaires may emerge from the severe crisis that is gripping the world’s economy.
Dalio says, “Governments that have the power to do so are printing money to help ease the debt burdens and help finance the expenses that are denominated in their own currencies, which will weaken their own currencies and raise their levels of monetary inflation to offset the deflation that is coming from reduced demand and forced asset sales that are happening as those that are stretched have to raise cash.”
Dalio is a firm believer that wealth cannot simply be created by producing more money and credit and that the long-term debt cycle is coming to its end. Dalio suspects that a restructuring of the monetary system is imminent. With countries like Venezuela, Lebanon, and the Bahamas exchanging local currencies for bitcoin, then Dalio may indeed be correct. If that is the case, then the third bitcoin halving could be a major catalyst for monetary change, resulting in a generation of new crypto millionaires.
Author: Luke Fitzpatrick
Stellar Lumens Is Breaking Out, Will Bitcoin Follow?
- Stellar Lumens appears to be leading the recent run-ups in the cryptocurrency market, based on this month’s correlation data.
- At the moment, XLM is breaking out of a consolidation pattern that suggests a 34% target to the upside.
- If history repeats itself, Bitcoin may soon catch up with XLM’s price action and start surging.
Stellar Lumens seems to be leading the market as its price surges. Based on monthly correlation data, Bitcoin could follow if XLM makes a further advance.
Stellar Lumens has been leading the run-ups in the cryptocurrency market since the beginning of the month. On Apr. 5, for instance, Stellar had surged nearly 7% by the time Bitcoin began to catch up. Five days later, a similar pattern emerged. Bitcoin started posting gains after XLM advanced 5%.
Then, on Apr. 21, Stellar jumped over 11% before BTC followed, rising towards $7,800.
Now, history could be about to repeat itself. Stellar Lumens is currently breaking out of a bull flag pattern that has been developing on its 4-hour chart.
The 34% upswing that Stellar Lumens went through between Apr. 17 and 21 created the flagpole, completing the bull flag pattern. Stellar has been consolidating for a few days, with recent price action confirming a break out.
This continuation pattern suggests that upon the breakout point, Stellar will move in the same direction of the previous trend and reach a price target of 34%. Such a bullish impulse would take this cryptocurrency to $0.084.
This target is determined by measuring the height of the flagpole and adding that distance to the breakout point.
If Bitcoin is indeed poised to follow Stellar Lumen’s path, it must first break above its 200-day exponential moving average on the daily chart. This resistance barrier is currently hovering at $7,900.
Due to the importance of this supply wall, a daily candlestick close above this level would likely ignite FOMO (fear-of-missing-out). In such a scenario, investors would rush to panic buy BTC to get a piece of the action, further contributing to the run up.
Under such circumstances, BTC could leap to the next significant resistance level that sits between $8,800 and $9,300.
Nevertheless, failing to move past the 200-day exponential moving average would jeopardize the bullish outlook in the short-term.
The pioneer cryptocurrency would then be forced to drop to its 100 or 50-day exponential moving average. These support levels sit around $7,500 and $7,200, respectively.
As Bitcoin’s halving approaches, the cryptocurrency market is expected to go through a period of exuberance and high volatility. Erratic behavior can already be seen in multiple altcoins, including Kyber Network, which is up 75% in the past seven days.
Before speculators start calling for moonshots, it is worth remembering what happened during the last two halvings. Historically, in the days leading up to the halving, the market was characterized by large capital inflows, saturating the market and allowing almost every coin to post large gains.
However, as the day of the halving neared, the whales leading the exuberant upswing decided to dump their cryptocurrency holdings and cash-in, leaving small-time traders under water. Now, a similar scenario could be unfolding. Investors must remain cautious to avoid getting caught on the wrong side of Bitcoin’s price action.
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Author: by Ali Martinez
Bitcoin: Not a Safe Haven, but Maybe Something More
Born within a financial meltdown and crisis, Bitcoin (BTC) has found itself again in the role of a proto-savior for the current failings of fiat and national currencies. Those failings namely being that national fiat currencies continue to be printed at a whim when political leaders are caught in a catch-22 between mass poverty and mass currency inflation — with any result likely being a compromised and unsatisfying mélange of stagflation.
Nevertheless, Bitcoin still isn’t immune from the pressures of a world steered toward uncharted waters. While one might respect the philosophical rigor of Bitcoin, it goes without saying that it is as vulnerable as any other asset in a panic-driven liquidity crunch. In a global economy where supply chain pressures have somehow made toilet paper the most valuable currency of all, Bitcoin could very easily be starting to lose the narrative that it is a store of value equivalent to digital gold. The fact that Bitcoin was an early asset sold off, initially outpacing the crash in traditional markets, shows it is not so much a store of value as a speculative asset, at least at this moment in history.
For five days in March, as the Dow Jones Industrial Average ultimately shed what would be one-third of its value, Bitcoin felt the hurt of a panic-driven liquidity crunch, likely driven by institutional investors pulling out, and losing over half its value — from $9,100 to $4,100. Bitcoin was the first asset that people sold when they needed cash. You certainly don’t want to be waiting on a long transaction time when everyone is panic-buying toilet tissue and nature calls.
Bitcoin still hasn’t lost nearly as much as it did when the bubble of its $20,000 peak burst at the end of 2017, shedding an even more jaw-dropping two-thirds in value. Putting aside the fact Bitcoin lost more in total value, perhaps inflated by speculative froth, that “crash” was also more destructive to Bitcoin’s progress because it was endemic to Bitcoin and its raft of new speculators.
Additionally, after the panic drop of early March 2020, Bitcoin’s price has stabilized in the $6,000–$7,000 range for the last month. In markets where the ultimate bottoms remain a mystery, a plateau for any significant amount of time is still something of a moral victory. Obviously, the best-case scenario would be for Bitcoin to bounce back to pre-crash prices, but this is unlikely and delusional to think, especially as the entire world’s markets remain down.
Here’s the bigger picture bad news for Bitcoin: There is no way, as things currently stand, that we can argue that Bitcoin is in any way a practical safe haven.
This brings further questions about what Bitcoin actually is right now. It’s not a payment token, and it’s not a store of value — so what is it? For now, it’s an outdated piece of technology that’s more brand than an actual use case. The idea that the crypto market is separate from traditional markets was proven to be wrong during the crash. They are much more closely linked than anyone thought.
However, as we know, this is not a position unfamiliar to Bitcoin. While its value is now very uncertain, and it could very easily go lower and lower because we simply don’t know how the world will be transformed by an unprecedented public health crisis. Along with business slowdowns and shutdowns for several months, there also still lies great promise in Bitcoin as a new economic solution, if not necessarily as an (especially speculative) investment vehicle.
In a time when western leaders are alternately praising and condemning China’s initial handling of the pandemic, that well-worn but also well-proven Chinese trope might be more timely than ever: A crisis can also mean opportunity. And here’s the good news for Bitcoin: Maybe the coronavirus will finally end the speculative frenzy that has defined and overshadowed the actual technology for the last half-decade.
The greed of short-term gain has driven long-term pain in innovation. Why innovate when there’s more profit in predicting the market? In a time of severe short-term pain, perhaps this will open the door to long-term gain. Just because Bitcoin is not a practical safe haven for a world in crisis facing severe short-term strains on the economy and supply chain, that does not mean Bitcoin and other cryptocurrencies will not provide some of the best solutions to drive a new economy.
In a new era when we have become newly aware of the invisible lethality that lurks in the otherwise unassuming paper note, number pad or touchscreen, electronic finance of all kinds will serve a newly vital purpose. In the long term, Bitcoin and other cryptocurrencies may not see value as either a safe haven or a get-rich-quick scheme but rather as one of the best means of transmitting value in a world that will accelerate a transition to the digital formats that would have otherwise taken years or even decades.
That doesn’t mean Bitcoin and other cryptocurrencies still won’t attract investors who are looking for alternative assets, especially those unmoored from capricious governments. However, with a newfound important purpose, the actual utility of these cryptocurrencies stands to increase multiple times over. My advice? Stop looking at their prices and start seeing their value.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Richard Dennis is the founder and CEO of TemTum, the efficient, quantum-secure, ultra-fast and environmentally friendly cryptocurrency. He is a globally recognized cybersecurity and cryptography expert and one of the world’s leading lecturers on secure networks, blockchain technology and encryption.
Author: Richard Dennis