Questions Get Answered

I was recently asked by several journalists to give my thoughts on the BTC halving. Since my answered weren't used, I figured I'd drop them here. Read.Cash Me Outside.

-₿locKade

Answers to the First Request for Comments:

1. We're just about a week from the Bitcoin halving. Why is this
halving different from halvings that have taken place in the
past?

"The first halving in 2012 was almost a non-event because the market was so small and the interest in Bitcoin at that time was such a niche thing. Even the people really into Bitcoin at the time didn't make much of it. The second halving in 2016 was significant. At the time of the halving, Bitcoin's market cap was $10 Billion and the price of a Bitcoin was $650. It also had a daily trading volume in excess of $1 Billion on the day of the halving. Today (May 5th) Bitcoin has a market cap of $43 Billion and is trading at nearly $9,000. The price of Bitcoin and size of the market are key differences. Another key difference is that the Block Reward is now much smaller: It went from 50BTC per block, to 25 during the first halving, to 12.5 during the second halving. The upcoming halving will reduce the reward to 6.25BTC every block, or about every 10 minutes or so. There is now a lot of general interest in Bitcoin and that's another key difference. Even your grandparents have heard of it by now."

2. Given the economic fallout from the coronavirus, how will the
effects of this halving manifest in Bitcoin's price point?

"I think it's too soon to say. I think due to unemployment and job losses, we may see some sell-offs from smaller investors needing the capital. However, I think wealthier individuals and institutions will gobble up the order books if the price dips too low."

3. How will Bitcoin miners and the Bitcoin mining industry be
affected by the halving?

"I think that  we're going to see a bit of a shakeup in the Bitcoin mining industry. The less efficient operations will be priced out and will likely have to shut down. When it comes to mining Bitcoin in 2020, you likely have a multi-millionaire dollar mining farm in order to mine in a cost-effective way. The outlook for those with higher electricity costs and less efficient ASIC miners isn't good."

4. Is the halving already priced in?

"I believe it is. We saw this in 2016 with a price run-up in May and a pre-halving sell-off in mid-June prior to the halving on July 9th. I see a similar trend with the price run-up from April 28th to the 30th and then a sell-off correction later on the 30th of April."

5. BTC's hash rate recently hit a new all-time high. Does this
have any implications for Bitcoin's price?

"I think it's bullish for BTC long-term but it doesn't necessarily correlate with price. The hash rate is actually down in the last 60 days. However, hash rate has more than doubled this year. One thing many people fail to account for, and price in, is that one reason the hash rate has increased is more efficient and faster ASIC miners coming online and replacing older ones."

6. Other thoughts! 

"If I'm correct that the halving is already priced in and we've had a pre-halving correction, we likely won't see immediate price action in either direction."

Answers to the Second Request for Comments:

(There is some overlap in some of the questions but the answers are slightly different and more recent time-wise, answers given May 7th)

2nd Article:

Hash Rate -- Experts project a hashrate increase
following the halving, do you agree? -

Short-term, post-halving, I think that we're going to see a bit of a shakeup in the Bitcoin mining industry. The less efficient operations will be priced out and will likely have to shut down. When it comes to mining Bitcoin in 2020, you likely have a multi-millionaire dollar mining farm in order to mine in a cost-effective way. The outlook for those with higher electricity costs and less efficient ASIC miners isn't good.  

 The premier cryptocurrency's short term price trend/outlook

I think the halving is, or will be, priced in pre-halving. We already saw a price run-up from April 28th to the 30th and then a sell-off correction later on the 30th of April. It came up again on May 6th and seems to have some support at $9200. The bulls will likely push it higher pre-halving and I wouldn't be surprised to see $10K plus BTC prior to the halving, with a modest sell-off and price correction post halving."

Does the fact that Bitcoin's value has remained relatively
stable around the $9000-$9300 range indicate that the market is
optimistic about the crypto industry in general? Or, do you
believe the recent surge is simply due to widespread market FOMO
and things will/might change in the near future?
 

I think this is bullish in the long-term for Bitcoin's value. With the lockdowns and Fed printing money, people have flocked to Bitcoin, not fled from it. 

(iv) Please feel free to add any more comments that you may see
fit in relation to this subject  

This halving really improves BTCs stock-to-flow and is another bullish signal for Bitcoin in the long-term in my opinion. BTC will continue to be volatile but will keep that long-term upward trend. 

Closing Thoughts:

Although I think it's fine that journalists outside the Cryptosphere ask these questions, and it'd good to see public awareness increasing about crypto, I think the questions could have been better. One thing I've noticed is how BTC-heavy the question sets are. I'd love to hear them ask about other ones (if they even know what they are or exist): BCH, Monero, ETH, etc.

I think that will come with time. See you on the ₿lockchain.

-₿locKade

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