What will happen to the price of Bitcoin after the reward is halved?

Following the Bitcoin reward halving on July 9, market experts have begun predicting whether the digital currency’s price will rise or fall in the coming weeks and months.

The reward halving has long been discussed, with markets predicting it and looking forward to how it will impact trading and investor sentiment.

Now all concerns have been alleviated, and a week after the reward halving, the price and the network as a whole have not been greatly affected.

By Bitcoin standards, the price of Bitcoin fell only slightly on the day of the halving (to $626.87 on July 9, 5.7% below its opening price) and has remained relatively stable overall.

The price has continued to rise since then, reaching $668.75 at press time, and many market observers believe that prices may continue to rise.

Continue to rise?

Joe Lee, chief information officer of digital currency trading platform Magnr, expects the price of Bitcoin to rise slowly and steadily based on trust in the new system.

“[The reward halving] represents a new level of maturity and stability for the bitcoin blockchain,” Lee told CoinDesk.

Lee said any gains before the reward halving occurred would reflect new demand from people who were reluctant to invest in bitcoin.

Arthur Hayes, CEO of bitcoin exchange BitMEX, noted that new macroeconomic concerns are bringing potential bitcoin gains.

Some observers believe that China and Brexit have driven this, while Hayes said that with the Bank of Japan's monetary policy driving the trend, the future of Bitcoin is bright.

If the Bank of Japan adopts further monetary easing, a depreciating yen could help Bitcoin’s value rise.

“The market is mainly focused on whether Japan will take Bernanke’s advice and go directly to the fiscal stimulus proposed by Abe-san,” he said. “If the Bank of Japan embarks on this path, it will flood global markets with more free money.”

Block discussion

If the Bitcoin community makes progress in its discussion on block size, the price of Bitcoin will also rise.

Currently, the maximum data limit for each Bitcoin transaction block is 1 megabyte. Some people in the Bitcoin community believe that the limit is too small and hinders consumer recognition and acceptance of Bitcoin.

Kong Gao, manager of bitcoin overseas marketing firm Fude, told CoinDesk this is not as big of an issue as many believe.

He also stressed that he values ​​efficiency more than block size.

"Upgrading doesn't solve the problem, it just kicks the can out of the way," Gao said. Making the blockchain more efficient is where we should spend more energy discussing and researching.

Lee also highlighted the status of the block size debate in the Bitcoin community and how it creates uncertainty for traders.

“We are all looking forward to the next big thing that may come out of the uncertainty surrounding the block size debate, and the potential growth in transaction demand. There are two clear camps on the block size issue, and the debate is inevitable,” he said.

Long-term bet

Another factor that influences the rise in Bitcoin prices is speculative leveraged trading.

Petar Zivkovski, operations director at Bitcoin trading platform Whaleclub, spoke about why market activity has cooled somewhat following the reward halving. Despite this, he stressed that the current speculative situation remains bullish.

“The ratio of long to short positions has stabilized at 72%, but most of the long positions were from before the reward halving,” he told CoinDesk.

He continued:

“ For the ratio to balance and the expectations of the market after the halving, these remaining long positions need to be closed. This can be done by either squeezing longs (Sharpe sales) or forcing traders to close at a profit.”

While short-term price gains may not be imminent, market observers say investors should remember that bitcoin prices are currently in a steady upward phase.