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- Dow Jones Realtime | Kurse | Nachrichten | ISIN: US2605661048 | WKN: 969420
- CNBC Puts Bitcoin In The Spotlight: The Last Time It Was A Bearish Signal For BTC
- Crypto Community Shudders as CNBC Predicts Bullish Bitcoin Run
- Bitcoin halving nears, here’s what to expect after the event
- A Massive VC Just Raised $500M to Back Crypto: Here’s Why It’s Important
Dow Jones Realtime | Kurse | Nachrichten | ISIN: US2605661048 | WKN: 969420
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CNBC Puts Bitcoin In The Spotlight: The Last Time It Was A Bearish Signal For BTC
The recent Bitcoin price increases, and the upcoming halving have brought back media attention. CNBC recently explained the upcoming halving and made a bold prediction claiming that BTC could surge soon.
Bitcoin made an appearance on CNBC’s Fast Money on Friday following the recent price surge. Crypto-friendly expert, Brian Kelly, outlined his views on the current situation and explained the halving:
“As the whole world is quantitative easing (QE), Bitcoin is about to be quantitative hardening. It doesn’t mean that the price of the asset will be cut in half, only that the daily supply is being cut in half.
In the past, this has been a catalyst for very big run-ups. We’ve had a tremendous run-up coming into this; it’s got some wood to chop around $9,000. But thinking from medium to long term, you now have an asset that will be more scarce than gold based on the stock-to-flow (S2F) ratio in an environment where the entire world is printing money.”
Referring again to the fact that Bitcoin miners will receive fewer rewards post halving, he added that the “weaker ones” might drop out. However, Kelly predicted that in thirty to sixty days from now, “we can see a nice run-up again.”
Kelly also brought out the comparison between quantitative easing and hardening. The US governments recently committed to “unlimited” QE after lowering interest rates to zero.
Quantitative easing involves buying a predetermined amount of government bonds or other financial assets in order to add money directly into the economy.
However, the increased levels of QE could easily result in the devaluation of the currency. Popular American economist, Peter Schiff, recently predicted that the unprecedented high levels of printing money could cause hyperinflation.
Quantitative hardening, on the other hand, works exactly in the opposite manner. It reduces the liquidity injected into a market over time by decreasing the daily supply available. As basic economic principles dictate, if the demand stays the same or increases, while the supply drops, the value of the asset should, in theory, go up.
And this is where Bitcoin comes in.
Bitcoin’s total supply is hard-capped to 21 million. Moreover, roughly every four years, the reward that miners receive for adding new blocks to its network is slashed in half, hence reducing the supply of freshly minted bitcoins on the market and reducing inflation rates in half.
Now the inflation rate is at approximately 3.64% and after the upcoming third halving in less than two weeks, it will drop to 1.8%.
Kelly was also on point noting that following the previous two events, the price of Bitcoin indeed surged. This causes lots of speculation within the community that history will repeat itself.
Of course, the overall economic environment this year is particularly different than the settings back in 2016 and 2012. The spread of the novel coronavirus (COVID-19) is taking its toll and major economies are slowed down as countries are in mandatory or recommended lockdowns as entire industries are halted from operating.
Bitcoin, and most of the cryptocurrency market, was overly reported by various giant traditional media outlets during the parabolic price increase in 2017/2018. Kelly himself has made several bold claims in the past, saying that he will continue buying Bitcoin at $20,000. In the following months, BTC lost 85% of its all-time high value.
Another example includes Ripple’s XRP. Compiling a guide on how to purchase it at the time, the report made serious claims such as “XRP is one of the hottest new cryptocurrencies, and it only costs a bit over $2 per coin.”
Such reports could push retail investors to buy promptly, which might accelerate prices even further. The XRP guide was posted on January 2nd, 2018, and just a few days later, the asset reached its ATH. What followed, however, was a quick and painful slump. A month later, XRP dropped by 82% to $0,57, and in August it went further down to $0,23.
In any case, mass media does bring attention to the cryptocurrency market, but it’s still questionable if that’s the precise attention it needs. Just a couple of months ago in February, Bitcoin was again in CNBC’s spotlight and what followed was a massive sell-off taking its price down to $3,600 in a day.
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Crypto Community Shudders as CNBC Predicts Bullish Bitcoin Run
Let’s get something out of the way. CNBC’s tweeting track record is not a refection of the network’s go-to cryptocurrency investor, Brian Kelly. He runs a digital currency investment firm dubbed BKCM whose strategy is “focused on global macro and currency investing, including investing in digital currencies,” according to the website.
The halvening is coming. With only 11 out until a major bitcoin supply cut, @BKBrianKelly breaks down why there could be a big breakout ahead for the cryptocurrency. pic.twitter.com/w9bzhbjNej
— CNBC’s Fast Money (@CNBCFastMoney) May 1, 2020
Kelly was touting BTC on the network before it was cool to do so. He talks the same language as the network’s guests like CoinShares’ Meltem Demirors and follows the fundamentals when it comes to Bitcoin catalysts. In other words, he’s not the problem. As the crypto community might say —
CNBC’s bullish tweet came in response to Kelly’s explanation of the upcoming Bitcoin halvingBitcoin halving is when the amount of new bitcoin created and earned by miners is cut in half. This happens… More event, in which he said,
“In the past, this has been a catalyst for very big — very, very big run-ups. We’ve had a tremendous run-up coming up to this. It’s got some wood to chop around $9,000. But i think in the medium to long term, you now have an asset that’s going to be more scarce than gold based on the stock-to-flow ratio in an environment where the entire world is printing money.”
In fact, much of Crypto Land would cheer Kelly’s analysis. But when the business network tweeted about the upcoming Bitcoin halving event, suggesting there could be a “big breakout ahead,” a collective sigh of disappointment could be heard throughout Crypto Twitter. That’s because CNBC’s tweets have a way of predicting the reversal of a cycle — whether it’s bullish or bearish. In this case, if the theory proves true, the bullish tweet suggests that the bears are about to come out of of hibernation.
As BeInCrypto previously reported, tech entrepreneur and Bitcoin and stock trader Jacob Canfield tested the mettle of what he refers to as the “CNBC Bitcoin -0.78% Indicator” in a chart dubbed “CNBC Is the Perfect Contraindicator.” The chart goes through August 2018, but the accuracy in which his theory proved right suggests that not much has changed when it comes to CNBC’s ability to read the cryptocurrency market. Canfield said at the time,
“Almost every single bullish tweet we’ve seen has been at the top of nearly every single rally, giving us a very strong sell signal. With every bearish tweet we see, it has been a clear indicator of a short reversal and end of a rally….With every bearish tweet, we typically see on average a 30% return.”
A lot would have to go wrong for the CNBC indicator to be dependable this time around. After all, the bullish catalysts are hard to ignore, including both the upcoming Bitcoin halving and green shoots of cryptocurrency adoption.
Cryptocurrency market data site CryptoCompare recently reminded its followers on Twitter of how Bitcoin reacted to the last halving event, which took place in 2016.
Meanwhile, signs are also pointing to greater Bitcoin adoption.
So perhaps this time around, the Bitcoin halving event coupled with wide-scale adoption will override CNBC’s tweeting track record. Crypto Land can only hope.
Author: Illustrations by A. Gnetova and G. Phan
Bitcoin halving nears, here’s what to expect after the event
The upcoming third Bitcoin halving event will hold on the 12th day of May, that’s less than ten days from today. Unarguably, the momentous occasion has been making headlines within and across the crypto industry, some tend to speculate the fate of Bitcoin price after halving.
The halving event is designated to slash Bitcoin’s mining reward by 50 percent, which facilitates the control of Bitcoin’s inflation and the rate of minting new BTCs. According to a tweet by Mati Greenspan, the annual inflation of Bitcoin will also reduce from 3.65 percent to 1.8 percent. This is approximately half of the global annual inflation rate.
Post-halving, the miners’ rewards will precisely be reduced to 6.25 BTC from 12.5 BTC after the halving. Previously, Bitcoin mining reward was settled with 50 BTC before the first halving occurred in 2012, which decreased the reward to 25 BTC in 2016.
It remains unclear what will be the outcome of Bitcoin price after the event; however, the price of Bitcoin had remained somewhat positive that it grew from $7,500 to a price level above $9k within a few days, although the price has declined below $9,000 again.
Some sentiments from cryptocurrency analysts tend to relate the sudden increase in Bitcoin price as a direct result of the soon-to-hold Bitcoin halving. This was backed with the opinion that many people are looking to add Bitcoin to their portfolio a few days away before the supply is reduced.
Meanwhile, the CEO at Binance.US, Catherine Coley, said that the effect of Bitcoin halving might not be witnessed as soon as expected. She made a middle-man statement, saying Bitcoin may see high adoption and a rally as well, or it might never see anything. She concluded:
We saw in 2016 that the halving itself was not an instantaneous reaction, but 18 months later we had the largest rally we’ve seen.
From the historical data, one can predict that Bitcoin is set for another new record; however, it is safe to say that this report is strictly not financial advice. It is rather advisable to conduct thorough research before investing in Bitcoin since it is a risky asset.
Ibiam is an optimistic crypto journalist. Five years from now, he sees himself establishing a unique crypto media outlet that will breach the gap between the crypto world and the general public. He loves to associate with like-minded individuals and collaborate with them on similar projects. He spends much of his time honing his writing and critical thinking skills.
Author: Ibiam Wayas
A Massive VC Just Raised $500M to Back Crypto: Here’s Why It’s Important
Supply chains have ground to a halt and dozens of millions are unemployed but this hasn’t stopped crypto from getting a big fundamental boost: one of Silicon Valley’s most respected venture capital firms just raised half a billion dollars to invest in industry startups.
Announced by Katie Haun and Chris Dixon, Andreessen Horowitz (a16z) — a VC firm known for its investments in Twitter, Slack, Lime, Instagram, and many other big companies — just finished fundraising for “Crypto Fund II,” a new “$515 million fund that will be used to invest in networks and businesses.”
Haun and Dixon will be the partners leading this fund. According to them, they will be focusing on five main categories of investments in the cryptocurrency space:
- Next Generation Payments
- Modern Store of Value
- Decentralized finance (DeFi)
- New Ways for Creators to Monetize
- Web 3.0
Vance Spencer, a co-founder of thesis-driven crypto fund Framework Ventures, said that this new $515 million fund could be very important to this industry moving forward.
“I see this as a recapitalization of the early-stage crypto scene both from a financial and legitimacy standpoint With crypto projects starting to show real traction, I am excited to see a later-stage funding ecosystem starting to take shape to support our industry,” Spencer said, summarizing the signifiance of this fund.
The raise comes as crypto funding has slowed down at a dramatic pace. Data shared by Rob “Crypto Bobby” Paone, founder of Proof of Talent, indicates that the number of crypto funding deals that took place in Q1 of 2020 was a mere 79 — far below the 220 in Q1 of 2019 or 230 in Q1 of 2018.
Andrew Kang, a venture investor, explained that Ethereum could be one of the biggest beneficiaries of this new fund. The investor interpreted a16z’s assertion that it will be investing heavily in “next-generation payment” projects as a sign that they will be “investing in ETH, the stablecoin settlement layer.”
A16Z is investing in payment blockchains
A16Z is investing in $ETH, the stablecoin settlement layer https://t.co/JfQGEkeFtq pic.twitter.com/xDIkbNy40v
— Andrew Kang (@Rewkang) May 1, 2020
Considering a16z’s previous fund dealing with blockchain, Kang is likely correct in making this statement.
Although Crypto Fund I made investments into vanilla projects like Coinbase, Libra, Polychain Capital, and Dfinity, a big focus of that portfolio was clearly Ethereum, stablecoins, and decentralized finance.
The venture capital firm’s Ethereum wallet, for instance, holds $19 million worth of ERC tokens like MakerDAO’s MKR and Synthetix, while the fund made direct investments into Ethereum projects like Compound, dYdX, and TrustToken.
Should a16z’s Crypto Fund II follow a similar format, countless projects based on Ethereum and potentially Ether itself could benefit greatly once investments start rolling.
Photo by Sharon McCutcheon on Unsplash
Author: Nick Chong