BCH and BSV are not as good as expected, can Bitcoin tell a good halving story?

Author: Bu Er Zuo

On April 10, BCH completed halving.

However, after the halving, BCH did not see the expected rise, but instead fell sharply. On the day of the halving, BCH fell from $256 to $229 on April 11, a drop of 10%.

As for BSV, another halving currency, it had already plummeted by 16% on April 11, one day before the halving, from $217 to a low of $182.

After the halving, the two major mainstream currencies not only did not get a boost, but fell instead, proving the old saying that all good news turns into bad news.

Interestingly, in 2012, Bitcoin halved for the first time. During the halving cycle, the price of Bitcoin rose from US$11 to a maximum of US$260, a full 23.6-fold increase. In 2016, Bitcoin halved for the second time, and the price rose 46.5-fold.

Both halvings have made the entire industry unprecedentedly hot.

However, due to the poor performance of BCH and BSV after the halving, many people began to worry about the upcoming Bitcoin halving.

Can the story of “halving” continue?

“It’s too early to be disappointed about the halving.” RenrenBit CMO Zi Cen told DeepChain, “BCH and BSV are not qualified to tell the story of halving. The story of halving can only be told by Bitcoin.”

The things in the story are true or false.

On May 13, Bitcoin will usher in its third halving.

Is the "halving" story, which has been talked about by cryptocurrency players for a long time, difficult to improve due to the impact of the epidemic and the global economic downturn? Or is there a hidden dragon in the abyss, which will drive the entire industry to soar?

To this end, DeepChain interviewed many industry leaders to make some forward-looking predictions about the direction of the industry after the halving.

“It will take some time for the halving effect to take effect”

OKEx CEO JayHao

Since it is a halving effect, it is an impact that should occur after the halving occurs, rather than before or during the halving.

Talking about the halving effect before the halving is actually hyping up market expectations. Theoretically, the halving will have two effects: an increase in mining costs and a decrease in output growth. The shutdown price of the latest mainstream mining machine can be regarded as the psychological bottom price of digital currency. When the decline in output growth cannot keep up with the increase in market demand, it will cause a price increase.

Currently, BCH and BSV have just halved, and Bitcoin has not yet halved. In the long run, the demand for the encrypted digital currency market will become larger and larger. It will take some time for the halving effect to show its effect. It cannot be achieved overnight. We need a certain amount of patience in this regard.

Investment opportunities in the blockchain industry in 2020 are mainly in the supply chain field.

The outbreak of the COVID-19 pandemic has had a severe impact on the global supply chain, and some industries have already experienced shutdowns and supply chain disruptions. This actually reflects a deeper problem: in an increasingly complex, turbulent and unpredictable environment, the current supply chain system lacks the ability to respond to risks.

Therefore, management consulting firms like Korn Ferry have proposed creating version 3.0 of the supply chain, using new technologies such as big data and blockchain to help companies solve problems of efficiency, stability, cost, and risk control, so that they have the ability to buffer, respond quickly, and adapt when faced with uncertainty.

Currently, supply chain issues have attracted the attention of major economies around the world. Ensuring the security of the supply chain will become an important part of the economic policies of various countries in the future, so there are great investment opportunities.

In the cryptocurrency market, as major central banks around the world implement monetary easing policies to save the market, the nominal price increase of various assets around the world is inevitable, which is why some people say "Cash is tarsh". However, due to the time lag of monetary policy, the nominal price increase caused by the flood of money will only appear in the medium and long term.

Of course, I am not cheering for the rise of mainstream cryptocurrencies, nor do I agree with the statement that "cryptocurrency is a safe haven asset against the over-issuance of legal currency." In order to resist inflation and preserve value, investors can choose many low-risk assets, and do not necessarily have to invest in high-risk digital currencies.

"I am still very optimistic about Bitcoin in the long run"

Xiong Yue, Director of Bixin Research Institute

Halving means that the supply of each block is reduced by half, and the price increase brought by halving should actually be a long-term phenomenon. Moreover, as forks with weak consensus, the halving effect of BCH and BSV is definitely not as good as that of Bitcoin, because the demand for them is not strong.

In addition, the serious decline in security of BCH and BSV will also make people not optimistic about them at present. Now, when the computing power is the lowest, the computing power of BCH is less than 1% of Bitcoin.

Therefore, in the short term, their prices reflect the "good news is all out", and I am still very optimistic about Bitcoin in the long run.

"The story of halving can only be told by Bitcoin"

RenrenBit CMO Zicen

It is too early to be disappointed about the halving. In fact, the fundamentals of the digital currency industry have not changed at all. The halving is benchmarked against the inflation that the entire fiat currency world can never stop. At this point, we have no reason to be disappointed. We are ushering in the largest global quantitative easing program in history.

As for benchmarking against the fiat currency world, only Bitcoin can do it. BCH and BSV can only follow the performance of Bitcoin before and after the halving. Therefore, there is no need to feel disappointed with the recent price performance of BCH and BSV.

I have said before that only after the halving, we will realize the true power of the halving. In fact, compared with the historical trend in 2016, we will find that we also experienced a similar decline and adjustment last time.

In 2020, the fundamental factor of the entire industry is still halving, and we still need to focus on the Bitcoin halving first.

If you are really disappointed or even desperate about the "halving", it is recommended that you choose to leave the market. If the fundamentals are not good, it will be difficult for this industry to have many opportunities in other directions.

Bitcoin halving is a change in the entire supply and demand fundamentals. It is a trend, not a story, and there is no possibility of a rupture.

I am very confident about the next two years, today, tomorrow, right now. Although I know everyone is a little bit lacking in confidence. But I think the madness is on the way, after the halving.

BCH and BSV are not qualified to tell the story of halving. The story of halving can only be told by Bitcoin, the big brother tells it, and the younger brother can only follow, because halving is the fundamental of the entire digital currency industry, and the benchmark of halving is the entire legal currency world.

Before the halving, everyone is looking at expectations, so anything is possible, up or down.

From another perspective, of course we have to make the vast majority of people despair about the expectations after the halving, otherwise the car will be too heavy.

Bitcoin is still Bitcoin, and the industry is still the same industry. The fundamentals have not changed, and the long-term trend has not changed. What has changed is the human heart, which strangles the bulls and makes "people" desperate.

But if the car is too heavy, it may not rise. But for now, whether it can rise or not will be known when the time comes (Bitcoin halving).

This is a bloody market, and the winners can only be a few people. To be a winner, you need to at least see the trend clearly and prepare for your own judgment in advance.

"Holding BTC in the long term may bring you surprises, but short-term holding is very painful"

Du Wan, COO of HexieDi

1. Bitcoin, with the turbulence of the external environment and the arrival of halving, the epic waterfall clears the leverage. Long-term holding may bring surprises, but short-term holding is very torturous. However, public chains with very good code have the opportunity to explode.

2. How to popularize blockchain to outsiders is a promising direction. There is too little fresh blood in the entire market now.

"DeFi will rise in the dual crisis of epidemic and economy"

Cao Yin, Managing Director of the Digital Renaissance Foundation

The logic behind halving is that supply is halved, but it depends on whether demand can keep up. Currently, on the demand side, there is a lot less speculative capital, and the risk preference in this market has undergone fundamental changes.

However, there are still 33 days before Bitcoin halving. Whether there will be a halving market remains to be seen. We cannot draw a conclusion based on the current performance of BCH and BSV.

There is an interesting trend now: the correlation between Bitcoin and US stocks is starting to decrease, while the correlation with gold is starting to increase. In the context of global economic uncertainty, it is still unclear how commodities and gold will move. Currently, Bitcoin is in a quantum state, that is, the state of an observer.

Speculators treat it as a speculative product, and many people in the market also treat it as a safe haven. In fact, these two types of people are constantly changing. Speculators may have a need for safe havens; people who participate in safe havens also have speculative needs. Now it depends on how the capital and sentiment sides of the market will develop next.

Some time ago, the plunge of Bitcoin was due to liquidity panic, and the epidemic caused a liquidity run. But now, the Federal Reserve has launched unlimited quantitative easing, even started to buy junk bonds, and has large-scale currency swap plans with some major central banks. Therefore, whether it is the US financial capital market or the international market, the liquidity panic of the US dollar has disappeared at present.

Bitcoin has plenty of bullets, and the supply of stablecoins such as USDT has been increasing rapidly, which in itself means that the market's demand for safe-haven assets is very large. These stablecoins are currently kept in exchanges and can be used to buy Bitcoin at any time. The demand for safe-haven assets is on the verge of exploding, just waiting for the powder keg in the peripheral market to ignite.

Secondly, I personally feel that instead of getting nervous due to the ups and downs of Bitcoin’s halving, it is better to focus on the progress of Ethereum and Polkadot, which are truly creating value.

Some time ago, I wrote an article titled "The economic crisis under the epidemic may be an important opportunity for the rise of DeFi", which talks about the reasons for the rise of DeFi and the direction worthy of attention. The logic behind it is that the epidemic will lead to the intensification of the phenomenon of anti-globalization, the fragmentation of the international capital market, and the financial bankruptcy of some countries. The result of the financial bankruptcy of a country is currency depreciation, regional financial crisis, and then a large number of banks will go bankrupt.

Ethereum, including the future Polkadot, can provide everyone with an open financial platform that is not affected by any regime or the outside world. As long as the Internet exists, payments, loans, and even investments in peripheral financial markets can be made.

Therefore, DeFi will rise in the dual crises of the epidemic and the economy, and become the next generation of financial infrastructure.

"2020 is the year of transformation of the entire blockchain industry from virtual to real"

Zhou Feng, co-founder of VNT Chain

I believe that 2020 will be the "transformation year" for the entire blockchain industry, which will gradually transform from the original hype to more practical applications.

The various problems exposed by the epidemic have shown us the huge opportunities of blockchain in supply chain management, charity and even social governance. We see that everyone from the government to enterprises are actively embracing blockchain, including the government's smart city, the "one-stop" policy of the Hangzhou Municipal Government, the bank's trade finance platform, the supply chain platform, and a large number of listed companies and industry giants integrating blockchain technology into various industries...

Therefore, 2020 is the year of transformation for the entire blockchain industry from virtual to real. In 2020, more opportunities lie in the close integration of blockchain and the industry.

"With 90% of the chips in circulation, who would be willing to take a gamble?"

BSV Skull and Bones Group Leader Qiu Shaoxian

Satoshi Nakamoto once said: In another 20 years, we will either have an enormous transaction volume or nothing.

Today, nearly 90% of the total amount of Bitcoin has been mined and circulated in the market. Compared with the previous two halvings, the impact of this halving on the circulation volume in the market is even more insignificant. At this stage, the market value of Bitcoin is still too small, and it is inevitable that it needs to interact with traditional finance. The fluctuation of the currency price also adds an uncertain factor to this inherently unstable computing power market.

Bitcoin itself is a complete economy with stable output expectations. As the difficulty continues to increase, miners have to spend a lot of money on electricity and hardware costs. Nowadays, mining is no longer a personal interest that some enthusiasts participate in on a whim. It is more like a social contract and an investment behavior that needs to be carefully considered before investing.

After the previous two Bitcoin halvings, financial tools such as futures hedging have appeared in the market to help miners reduce risks. The price increases after the first two halvings have also led many people to believe that the next rise in the price of the currency is also natural.

In an open market, there is no shortage of risk-averse investors, and it is not ruled out that some financial giants have taken a fancy to this plate and tried to make a layout. However, in the absence of sufficient practical use, the more the price deviates from the actual value, the greater the room for decline when the bubble bursts.

To date, Bitcoin mining has been upgraded step by step: CPU→GPU→ASIC dedicated mining machine→dedicated mining farm→dedicated hydropower station. Today, the total SHA256 computing power is about 123.23EH, and the electricity bill for mining can reach hundreds of millions of yuan per day.

This also means that the cost of producing each block is very high. If these blocks cannot provide enough value, someone will eventually pay for it.

Miners are actually short sellers in the cryptocurrency world and need to sell the mined coins from time to time to maintain sufficient cash flow.

This is determined by the PoW mechanism. If the use case is not expanded in time, then when 90% of the chips are already in circulation, who is willing to take a gamble and pull (take over) the market to carry the sedan chair and give money to everyone?

"Whether it is halving or bullish, quantification is the best direction"

Coin CMO Shi Daye

Judging from the development of the cryptocurrency circle, the vast majority of people entered the market between 2017 and 2018. Those who have not left the market have been there for three years at the earliest and two years at the latest.

We have experienced the bear market in 2018, the IEO bull market in the first half of 2019, and the contract trading in the second half of 2019. We have grown from a novice to an experienced investor. We also understand that it is difficult to trade and make money at present.

We need to rely on powerful weapons, quantification! So I think in the second half of 2020, whether it is halving or bullish, quantitative institutions and quantitative products serving novices will be the best direction.