While fear and uncertainty around BTC has subsided considerably before the next halving, experts have noted that the greed aspect of the F&G Index has increased considerably in recent days.
With the third halving of Bitcoin (BTC) just over 24 hours away, the hype of the overall market surrounding the event has grown exponentially, especially after balancing at the $ 10K threshold for some time. On May 9, BTC fell to the $ 8,100 mark before making a small recovery to around $ 8,800.
However, the fact that BTC was able to avoid bearish market pressure instilled some confidence in the hearts of investors around the world, despite Bitcoin facing a 15% value slip on May 9.
Furthermore, it should be mentioned that since it fell to a price point of around USD 3,867 registered on March 12, the value of Bitcoin has almost tripled, so much so that a report published by the blockchain research firm IntoTheBlock claims that almost 85 %, or 25.79 million, of all wallet addresses that have Bitcoin currently can be sold at a profit from their holdings.
With all that information available, it's worth digging into the question of what the key Bitcoin market indicators really suggest about the currency's future after its halving event, and whether or not the crypto asset is destined for a major financial rally. As many experts have repeatedly pointed out since the beginning of the year.
Relationship with BTC's fear and greed index
To get a better understanding of everything that is happening right now with halving, Cointelegraph contacted Pascal Gauthier, the CEO of Ledger, a cryptocurrency hardware wallet maker, who believes Bitcoin's fear and greed index is It has been kept very conservative throughout March and April. However, he added that his company has noticed a large decoupling of people's interest in cryptocurrency, which emerged through social media and Google searches, amid fears of volatility surrounding cryptocurrency markets.
He also opined that as the halving approaches, the greed aspect of the F&G Index appears to have increased exponentially, adding that this phenomenon can be largely attributed to the aforementioned event.
Likewise, David Waslen, CEO of HedgeTrade, a blockchain-based forecasting platform, believes that with halving just a day away, Bitcoin is floating in the neutral zone of the fear and greed index, coming out of a long stretch bearish in excessive fear zone. He added: "With record exchange volumes and all the money being poured into stablecoins (which could easily pass to Bitcoin), this neutral phase may not last long."
Jeffrey Liu Xun, the CEO of XanPool, a peer-to-peer fiduciary gateway, echoed the sentiment mentioned above, while the BTC fear and greed index has been showing neutral signs, the greed element appears to be taking over and increasing quite fast Xun further said: "The F&G Index has just moved from 'extreme fear' to neutral territory and appears to be gathering strength towards 'extreme greed' territory."
The effect on the hash rate will be noticeable
Bitcoin halving is a pivotal event that most people in the cryptocurrency community look forward to every four years, as it directly relates to supply and demand for the largest crypto asset. And while halving doesn't always have a direct relationship to the BTC Greed and Greed Index, it certainly does have an effect on cryptocurrency hash rate 100% of the time. This is because, after the event, the block reward sizes are reduced, leading to a drastic increase in requirements related to mining efficiency.
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Experts make Bitcoin price predictions as halving approaches
To get a more comprehensive view of how halving will affect Bitcoin's hash rate, Cointelegraph contacted Lennix Lai, director of financial markets at cryptocurrency trading platform OKEx. In your opinion: "In the short term, we can see that some miners cannot continue in the game. This means that the hashrate has the potential to go down. However, with improved equipment and increasingly efficient mining, the hashrate will gradually increase again."
Similarly, Marie Tatibouet, the CMO of Gate.io, a Bitcoin exchange platform, noted that if one is guided by previously logged data, Bitcoin halving events have traditionally been followed by a gradual increase in the rate of network hash, only to decrease once again three months after the event. She then said: "The hash rate also increased at a rapid rate after the second halving in 2017. If we buy into any of these data trends, I think the hash rate will increase within a month of halving."
Lastly, a number of experts also tend to agree with the idea that an increase in the hash rate is likely to be seen in the near future, as large numbers of BTC miners may have to start consolidating your resources to stay afloat within this space. Not only that, but it is also entirely possible that the day-to-day work of this burgeoning sector can be defined by the activities of a few individuals or groups who own considerable equipment and have the capital necessary to resist the looming threat of reduced block rewards.
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The impact of halving on the price of Bitcoin
As the reduction in Bitcoin's reward ratio per block will become immediately apparent, i.e. the amount of BTC received per block will decrease from 12.5 to 6.25. This reduction, in Lai's opinion, will most likely force smaller-scale miners to shut down their businesses and generate increased liquidation pressure, which, in turn, can cause the cryptocurrency market to turn bearish in the short term. However, in the long term, Lai believes that the price of BTC will recover because, from a macroeconomic perspective, BTC has begun to demonstrate itself as a safe asset.
Also, after halving, if Bitcoin's hash rate drops, historical data seems to point to the fact that the price of the coin is likely to follow suit. In this sense, when looking at the data from 2012 and 2016, the main price of the cryptoactive recovered before each event and was corrected shortly after. Similarly, in both cases, in the medium term, the value of BTC increased by a whopping 10,000% in 2012 and then again by 2,500% in 2016.
Xun also believes that in the short term, a price drop may occur. In this regard, he clarified: "I see a local peak that occurs on the date halving + - 2 days or so. And then the price is priced lower than that for a short-term period. ” However, Kade Almendinger, co-host of the Dark Side of the HODL Moon podcast, firmly believes that any possible monetary increase in BTC's future has already been factored into the existing value of the coin. He added: “We already saw a price increase from April 28-30, and then a settlement correction later on April 30. It reappeared on May 6 and appears to have some support at $ 9,200. The bulls will probably push it higher before halving and I wouldn't be surprised to see BTC at $ 10K or more before halving, with a modest settlement and price correction after halving. "
The volatility in the hash rate in this pre-halving stage of Bitcoin shakes the entire mining sector
COVID-19 induced uncertainty
Considering the post-halving increases that followed the first two halvings, it wouldn't be surprising to see similar growth in BTC's short-term future. However, this time, due to the current COVID-19 pandemic, experts are anxiously waiting to see how the current situation affects the financial future of the main cryptocurrency, especially as the virus continues to bring the stock markets to their knees. of all the world. On the subject, Tatibouet stated: “I think the COVID 19 pandemic has a big role to play in the broader scheme of things. Initially, it created some anxiety in the investor community, and then eventually stabilized. We have seen BTC trade increase on our platform after COVID-19 hit China. I think the increase in the volume of Bitcoin trading, overall, is responsible for Bitcoin's recent recovery and ultimately its stability. "
Similarly, Lai also believes that the current cryptocurrency market seems cautiously optimistic despite the COVID-19 crisis that is plunging the world economy into a massive depression. In this regard, he added: “Most central banks have been considering alternative classes of non-monetary assets. However, they have their limitations when it comes to covering the risks initiated by the global blockade induced by COVID-19, especially in the stock market. "
Is Bitcoin's Momentum All FOMO?
To assess whether BTC's current financial momentum is sustainable or just a by-product of the widespread fear of fear of missing out on potential gains, or FOMO, it is worth considering the fact that continued optimism surrounding the industry could be due to the fact that The Bitcoin network has matured over the past decade, so much so that it now supports hundreds of exchanges, futures markets, loan programs, wallets, exchange platforms, as well as various blockchain-based financial applications. In this sense, Waslen added: "People are optimistic for sure, and maybe some of that is based on hype. But it's also due to all the work being done, plus the fact that Bitcoin has the world's largest decentralized computer that provides security to its global users. For 10 years, it has strengthened, has not been hacked, and has exceeded the ROI of all other assets (over the decade)."
Lastly, Gauthier believes that the pandemic has caused traditional financial players to reassess their entrenched beliefs in such a way that many major corporate entities have begun to view Bitcoin as a legitimate store of value, something that he says has helped to create positive momentum for the major crypto asset.
A post-halving perspective
Most cryptocurrency experts are of the opinion that BTC's financial potential cannot be accurately determined in the short term due to a number of technical variables that are difficult to assess.
Furthermore, with Bitcoin's current value hovering at much lower levels than they were in 2017, many of the "I want to get rich quick guy guys" have largely disappeared from this space, leaving the ecosystem largely in the hands of those who are interested in harnessing the digital potential of BTC to create novel financial platforms as well as other similar offerings. Speaking about the future of Bitcoin, Adam Traidman, CEO and co-founder of BRD, a crypto wallet provider, told Cointelegraph: "Warren Buffet will not invest in Bitcoin because it is too volatile, but look at oil. Old ways of thinking have been left behind. Compared to most other assets, if you had Bitcoin later this year, you would have ended up on top There is a reason why many longtime Bitcoin enthusiasts say that no matter what happens with volatility, at the end of the day, if you believe in the future of Bitcoin.
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