Bitcoin’s third halving (BTC) has finally happened, hashrate fell less than estimated, costs skyrocketed, but unlike doom mongers, bitcoin price has not fallen.
What happens now? What will be the city’s next talk, as the “priced / unpriced” debate has now disappeared, along with 50% of the block grant on May 11?
According to figures interviewed by Cryptonews.com, some key stories and trends are likely to dominate the fate of Bitcoin in the next 12 months.
From the increasing attractiveness of bitcoin as a value stock in times of economic crisis to growing regulations, all of these stories could eventually make BTC more mainstream and more accessible to a wider pool of investors.
1: Decentralized digital gold campaign
Jay Hao, CEO of large crypto exchange OKEx, says Cryptonews.com that the persistent coronavirus crisis may put bitcoin’s sell-off pressure in the near term. That said, he expects Bitcoin’s story as ‘digital gold’ to grow in size after the immediate aftermath of the halving.
“The macro context looks optimistic for Bitcoin in the medium to long term,” he said.
“As people begin to question the value of ‘helicopter money’ and the effect of uncontrolled inflation of the money supply, BTC has done the exact opposite … I think a big trend we’ll see this year is that Bitcoin’s status as gold further enhanced digitally. “
Binance Research agrees with this analysis.
“Now, every time a major central bank prints money … the original Bitcoin ethos is likely to regain traction,” a spokesperson told Cryptonews.com. “The original Bitcoin story is likely to reappear or be enhanced: Bitcoin as a store of value, as digital gold.”
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2 & 3: more institutional investors, more derivatives
As a result of Bitcoin’s growing deflationary status, analysts expect another major post-Bitcoin halving story to emerge: an increase in institutional investors.
“We will also see more institutional investors come on board now that they see BTC as a hedge,” said Jay Hao. “We are already seeing some very positive signals for the market, such as the famous macro investor Paul Tudor Jones adding BTC as a hedge to his portfolio of public funds.”
Hao reminds that investment banking giant JPMorgan has also recently opened accounts for crypto exchanges Coinbase and Twin.
According to him, this will “certainly open the gates to more stock exchanges and more large banks worldwide”.
In addition, Hao expects that the “BTC derivatives market will continue to grow and expand exponentially, perhaps even three or four times the spot in the next 12 months.” (Learn more: Crypto derivatives market could be ‘twice as big as spot market in 2020)
However, not everyone thinks that the current economic conditions are ripe for the steady growth of institutional investments. Also talking Cryptonews.com, ThinkMarkets analyst Fawad Razaqzada believes there is a risk that BTC may correct itself in the coming months.
“Unemployment has skyrocketed worldwide, and companies are filing for bankruptcy left and right,” he says.
“And while central banks and governments are doing all they can to address the supply side of the economy, household and corporate demand may remain weak for a long time, which could undermine the economic recovery.”
Against this fundamental background, Razaqzada suspects that bitcoin investors can take advantage of higher prices to make a profit, while others may be put off by the volatile economic conditions. As such, the story can be a frustrated potential.
Learn more: This crisis is good for Bitcoin, but beware of a recession – Luno CEO
4 & 5: Bitcoin upscaling, green mining
Another less prominent – and longer-term – story relates to Bitcoin scaling. As Ethereum (ETH) eventually transitions to the proof-of-stake (PoS) Ethereum 2.0, analysts expect that such developments will put additional pressure on Bitcoin to develop its own scale solutions, as well as more ecological mining methods.
Jay Hao says, “Bitcoin is having scalability issues, but many protocols are being worked on, such as the Lightning Network and Liquid sidechain. I think the challenges for Bitcoin and others [proof-of-work] coins need to find more energy-efficient ways of mining with more advanced equipment, green energy and cloud solutions. ‘
Likewise, Binance Research spokesman does not expect Bitcoin to be affected too much by the shift from Ethereum to PoS.
However, this could change in the long run, “as Bitcoin does indeed face foreseeable and inherent problems.”
Learn more: Bitcoiners can change their minds about PoS, ‘Who Knows,’ says Buterin
In short, Binance Research envisions that a long-term story for Bitcoin will relate to how it solves the problem of reducing block rewards. While some analysts to believe that Bitcoin will have to fundamentally reform itself to meet this challenge, Binance Research believes that “non-conservative off-chain solutions, such as the Lightning Network, can avoid the need to choose between … compromises.”
Learn more: Attempts to increase Bitcoin’s offering would end with another “Bitcoin”
6 & 7: Regulation and CBDCs
Finally, tightening regulations in the coming months and years is likely to be a different Bitcoin story, especially if FacebookThe Libra forces regulators to sit up and take note of cryptocurrencies.
“The organization behind the FATF, the Financial Stability Board, urged countries to adopt and enforce local variants of the FATF recommendation before Libra commences, “explained the spokesperson for Binance Research. “So yes, Libra’s arrival is very likely to be accelerated regulation that applies not only to stablecoins, but more generally to crypto assets.”
More generally, Jay Hao expects Libra and central bank digital currencies (CBDCs) to eventually pay more attention to Bitcoin and other cryptocurrencies.
“Once they start learning about cryptocurrencies by using a central bank supported version of it or a corporate currency, they will have the knowledge and many will develop a natural interest in Bitcoin, less of a medium of exchange and more of a store of value.”
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