BCH and BSV halving, what is the subsequent impact on BTC?

Text | Huang Xuejiao Editor | Hao Fangzhou

Produced by | Odaily Planet Daily (ID: o-daily)

BCH, the long-awaited vanguard of the halving, has finally arrived at the halving.

At 20:19 Beijing time on April 8, the BCH block with a height of 630,000 was mined by the Antpool mining pool. The block reward was changed from the original 12.5 BCH to 6.25 BCH, announcing the completion of the BCH production reduction.

The current BCH network computing power is about 3.69 EH/s, the mining difficulty is 523.62 G, and the BCH price is above US$265, down nearly 5% from its high within 24 hours.

Can BCH, which is targeted by short sellers, still have a “halving market”?

This is the first halving of BCH since it “departed” from BTC in 2017, so there is no “history” to refer to.

However, as the "crown prince" of Bitcoin and one month ahead of Bitcoin in halving, many people have high hopes for the price performance of BCH (and its forked coin BSV).

Since this morning, the prices of BCH and BSV have begun to rise, leading the mainstream cryptocurrencies.

At 10 a.m., BCH rose from $251 to a high of $280, with a maximum increase of 11.55%; BSV was not to be outdone, rising from $184 to around $220 almost at the same time, with a maximum increase of 19.5%.

The biggest concern of investors is whether such an increase can continue after the halving, or will it reverse?

Odaily Planet Daily interviewed some BCH supporters and coin holders, and many of them believed that BCH will fall in the future.

From the perspective of the long-short ratio, the BCH contract situation on OKEx shows that the short position ratio was greater than the long position ratio for the past two consecutive days (4.6-4.7); and from 5:00 to 10:00 today, the long position briefly overwhelmed the short position; but as BCH began to rise at 10:00, the short position gained the upper hand again. OKEx data shows that the number of BCH delivery contract short accounts has reached 1.5 times that of long accounts.

Data from: OKEx, collection time: April 8, 14:00

Data from: OKEx, collection time: April 8, 14:00

OKEx Research Director "K" believes that the strong bearish sentiment is mainly due to the fact that many investors are worried about the emergence of the "shoe dropping" market. Having such risk awareness is a basic quality of a qualified investor. After all, the Litecoin production reduction market has been less than a year in the past, and everyone still remembers it.

Crypto analyst "Blockchain William" gave a detailed review of LTC's halving in August last year in his blog.

“First, there was a slight increase before the halving, which was not a big reaction. Everyone generally believed that there would be no market after the halving. Unexpectedly, there was a bright spot after the halving. The market suddenly rose and broke through $100, but it has not returned since then. However, another important factor is that the overall environment is downward.”

"History is always surprisingly similar, but not necessarily in succession. This time, you may see plan A, B, or C, all of which have appeared in history. At this point, I don't think it makes much sense to judge whether a 'shoe drops' market will occur, because it is really difficult to accurately predict short-term price trends." Mr. K told Odaily Planet Daily.

Some people are pessimistic about the BCH market after the halving, while others believe that the halving market may not exist at all, and even if it does, it is likely to be consumed in advance like LTC.

“The so-called market is due to the upcoming halving. This statement is based on the confidence and consensus brought by Bitcoin from beginning to end. Other currencies do not have such a consensus basis, nor will they have a significant decline in market supply due to the halving of Bitcoin,” said William of Blockchain.

According to statistics, since 2020, BCH and BSV have generally shown a trend of first rising and then falling. Many coin holders believe that the halving effect has played a significant role in the overall price increase.

BCH reached its highest point of the year at $495 on February 15, with a cumulative increase of 155%, but it continued to "retreat" in the following month, hitting the bottom on March 13, with a cumulative decline of 71%.

BSV has had two major increases this year. The first occurred on January 10th, during an independent rally. BSV recorded a 280% increase in four days, and a 320% increase compared to the beginning of the year. However, it also retreated by nearly 75% during the March crash.

After several ups and downs, BitUniverse data shows that BCH and BSV are still the few mainstream currencies that have increased in Q1, with increases of 6.9% and 73% respectively.

Does this mean that the “halving benefits” have been exhausted?

K is optimistic. “We should divide the halving into two stages of impact: one is the short-term ‘bubble blowing’ stage, and the other is the long-term ‘brick laying’ stage. Halving affects long-term supply and demand, so the halving market will not end prematurely.”

"Blockchain William" holds a negative view based on the experience of LTC. "After the halving, mainstream coins usually follow the general trend, and there is probably no independent market." But he added that the difference between BCH, BSV and LTC is that there are strong "main forces" behind the two coins that are halved this time.

After the halving, will BCH lack computing power?

The most direct negative effect of halving is the impact on mining revenue.

As profits decrease, some miners leave the market or switch to mining BTC, resulting in a short-term drop in computing power (half a month to one month), which is normal.

But if you are worried that the BCH network will be unsafe because of this, you are worrying too much.

Data from: BTC.com, collection time: April 8, 16:00

Except for one "unknown" mining pool, the top five BCH mining pools are all world mining pools that have clearly supported BCH in the BTC fork or the BCH & BSV computing power war, including AntPool and BTC.com under Bitmain, ViaBTC, a micro-bit mining pool invested by Bitmain, and BTC.TOP, a mining pool owned by Jiang Zhuoer.

Among them, Jiang Zhuoer voted against the recent "BCH Miner Donation Plan" and said that he would use his personal 3500P computing power (approximately equal to the total network computing power of BCH before halving) to defend the interests of BCH. Therefore, if BCH encounters a computing power attack, it is expected that these mining tyrants will not sit idly by.

Data from: F2Pool, collection time: April 8, 20:00

In addition to the well-known "big legs", BCH's current mainstream client ABC also has a setting called "rolling checkpoints", which is used to prevent double-spending attacks to a certain extent when a block receives more than 10 confirmations.

What impact does the dual-coin halving have on BTC?

From the perspective of miner transfer, how much competition will the dual-coin halving theoretically bring to BTC mining?

Assuming that half of the computing power of BCH and BSV is turned to mining BTC, we can see that BTC will increase its computing power by 3%, which is a common increase for Bitcoin. However, at a time when mining profits are meager, this increase is still a considerable burden for BTC miners.

On the other hand, the price trend of the dual-coin halving will also become one of the reference systems for the BTC halving market.

“The trend of each halving is of reference significance for future halvings, because you need to personally experience options A, B, and C to gain experience and reference data. Especially when extremely similar events are forming extremely similar price trends.” OKEx Investment Research Director K believes.

Miners’ donation plan is on hold. How to solve the slow development of BCH?

In addition to price and network security, the value of a public chain also depends on development progress and the on-chain ecosystem.

In this regard, BCH is often compared with its "brother" BSV.

Both have similar large-block expansion routes and payment public chain visions, but after the two separated at the end of 2018, BSV's on-chain applications and transaction volume quickly surpassed BCH, so doubts about "BCH's slow development" have been heard.

The figure below shows the daily trading volume of BTC (yellow line), BCH (green line), and BSV (red line). It can be seen from the figure that outside of the stress test, BSV's trading volume has overwhelmed the previous two.

Of course, many BCH supporters do not recognize BSV's "lead".

BCH enthusiast BruceLee once complained in his blog, "Some coins (referring to BSV) store weather data on the blockchain, thereby generating a large number of TX (on-chain transactions). This can only be described as pure data brushing. Even if more TX is generated, it has nothing to do with killer applications."

If BSV's ecological applications are not considered practical applications, then as a public chain, BCH may be even worse because there are only a few applications on it.

The reason for this is that Odaily Planet Daily has previously introduced an intuitive problem: the fundraising method of the BCH development team is inefficient and unsustainable.

In order to avoid development shortages and further strengthen the ecosystem, in January this year, Jiang Zhuoer published a blog post announcing a "BCH Infrastructure Financing Plan" (hereinafter referred to as the "Plan"), which aims to continue to raise funds for the development team by having miners donate block rewards.

This "plan" was denounced as "dictatorial" by many community members because of its tendency to be implemented by "joint implementation by several major mining pools" and "computing power voting". Eventually, Jiang Zhuoer, one of the main initiators, announced that the plan would be abandoned.

But surprisingly, on February 19, the ABC team released a new version of the client, which defaulted to miners only being able to vote in favor of the "Plan". To not vote, or to vote No, one must have certain programming knowledge and modify the code by themselves.

According to BCH supporter “Walking Translator C”, this version of the software was called “malware” by the community. Subsequently, freetrader, a former founding member of the ABC team, announced the launch of a new version of the client BCH Node (BCHN) that did not include the “plan” and gradually gained support.

At the same time, the community lacks trust in the main development team ABC, and the risk of community division remains.

"At present, it seems that as long as there is no malicious computing power to vote in favor of that 'plan', it will basically not be activated." Walking translator C believes.

Looking on the bright side, walking translator C believes that while the "plan" has caused controversy, the overseas community has launched many alternative solutions, including the birth of a new full-node client BCHN and a new financing tool Flipstarter, making the BCH ecosystem more robust and diverse, and development more decentralized. In the long run, this is still beneficial to the development of BCH.

In addition to the donation plan, on March 20, Tether announced that it would issue USDT on BCH through the SLP protocol. This is the fifth public chain selected by USDT after underlying public chains such as BTC and ETH. To a certain extent, it shows the recognition of this "money printing" bank in the circle for the community.

According to BruceLee, the SLP protocol (a token protocol running on the BCH network) launched in early 2019 has released 7,530 currencies so far. According to statistics, the TX generated on SLP accounts for more than 10% of the total TX of BCH.

In addition, in early April, the developers of General Protocols announced that they would launch Anyhedge, a derivatives platform based on BCH, which is expected to become the first DeFi protocol on BCH. On April 5, the currency mixing solution Cashfusion also successfully raised $51,000 in BCH in the community, which will help the team continue to develop and provide exclusive privacy transaction solutions for BCH.

In the past month, we have indeed seen a lot of important progress, which may indicate that the BCH ecosystem application is making the leap from 0 to 1.