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Post-halving scenario on Bitcoin’s long-term market outlook

Written by  May 07, 2020

With Bitcoin’s (BTC) fourth halving only days away, members of the global crypto community are eager to see how the event pans out monetarily for the flagship crypto asset.

Historically speaking, the halving has almost always had a positive impact on Bitcoin’s price, but this time around, many experts believe that any potential value surges may have already been priced in. It bears mentioning that the halving will most likely have the biggest impact on miners, as the reduced reward ratio following the event will rapidly alter their profit streams, forcing small-time players to either adjust their operations accordingly or shut down completely.

Not only that, some pundits have commented that the aforementioned “supply shock” could compromise the security of Bitcoin by causing a rapid drop in miner hash power. In this regard, Alex Heid, the chief research officer at SecurityScorecard - an information security company that rates the cybersecurity risks of corporate entities - believes that ransomware attacks will increase as a result of the halving, with miscreants most likely making use of known vulnerabilities and phishing as a means of deployment. So, how is the upcoming halving going to impact BTC’s overall market sentiment and trust?

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Also see: RSI comparisons before Bitcoin halving

Owing to the fact that the aforementioned COVID-19 crisis coincides with the BTC halving, the premier cryptocurrency's image seems to have improved somewhat in the eyes of investors, who are now beginning to gain a more in-depth understanding of Bitcoin's self-deflationary and decentralised design. Commenting on the subject, BlockFi co-founder and CEO Zac Prince told Cointelegraph that the halving is a “perfectly timed opportunity for Bitcoin,” adding:

“Current market dynamics are driving a bolstered interest on digital currency for the long run that go beyond a rudimentary understanding of the rules of supply and demand. Historically, past halving events have always resulted in an eventual upswing of BTC. ”

Market sentiment has already improved significantly

Amid the global economic uncertainty, it seems as though cryptocurrencies have been steadily gaining an air of trust and legitimacy around them. In this regard, eToro analyst Mathew De Corrado told the Cointelegraph that since the last halving event in 2016, his company has seen an influx of clients looking to add Bitcoin to their portfolio.

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He also pointed out that a lot of eToro customers have shown greater interest in cryptocurrency as a result of the increased economic stimulus added by governments across the globe, especially because a vast majority of crypto investors tend to see these assets as a hedge against potential future inflation and the depreciation of their local currency. De Corrado closed out by saying:

“Trust in crypto assets, in my opinion, will largely stem from increased visibility in the public eye, from government organisations, increased regulation and / or oversight, and also from increased demand from institutional investors.”

With the halving fast approaching, it remains to be seen how BTC’s public perception will change after the event, given that the currency may be subject to a price surge or a decline in the short term. If Bitcoin is able to stay on an upward ascent, it would help embed the narrative that Bitcoin is not only a potential long-term investment avenue but also a means of hedging economic risks that are usually witnessed when traditional markets tumble and fall as a result of unfavorable market conditions.

On the other hand, if Bitcoin’s value starts to slide after the halving, investor confidence may be influenced, but when considering the current market situation, this effect may not be long-lasting.

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Paul Saunders

Crypto tech journalist, Paul specialises in Crypto news having worked and traded in the field for over 5 years and has previous Blockchain admin roles to his credit. His knowledge and experience in Crypto tech is very important to us and his contribution is invaluable.

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