450,000 coins, Bitcoin hits a new high in RMB price. Is the halving a good thing or a bad thing?

24-03-01 14:28
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Original Title: "450,000 RMB per Coin! BTC/CNY Hits Historical High, Will Bitcoin Experience a Crash or a Bull Market after Halving?"
Original Author: Mu Mu, Plain Language Blockchain

On February 29th, after several consecutive days of gains, Bitcoin quickly rose above $64,000, just one step away from its all-time high of $69,000. However, due to exchange rate fluctuations, if calculated in CNY, Bitcoin has already exceeded 450,000 yuan per coin, breaking a new historical high. However, that night, just as the cryptocurrency market was still boiling, the traditional financial giant JPMorgan Chase inopportunely poured cold water on it: "Analysts predict that the price of Bitcoin will fall to $42,000 after the halving."

Recently, there have been many major events in the cryptocurrency market that have affected the price of Bitcoin, such as the continuous development of the Bitcoin ecosystem and the approval of spot ETFs. The next highly anticipated event is the halving, which will occur in just over a month. As a significant event in cyclical theory, historical Bitcoin halvings have often caused a stir in the market.

Due to the many "analyses" before each Bitcoin halving, which claimed that this time the halving is very different, is this year's halving a positive or negative factor? Can it still bring a bigger bull market in the future?

Image source: oklink Halving Countdown

 01 "Half-Cycle Theory": Is it a case of seeking a sword while sitting in a boat?

The halving cycle theory uses historical bull and bear market times to prove the correctness of the 4-year halving cycle. However, some people try to use a magnifying glass to pick out details and find flaws in various cycle theories in an attempt to break the belief that the "Bitcoin halving cycle theory" is unreliable.

Bitcoin Halving Schedule Over the Years:

· In January 2009, starting from the genesis block, the system initially defaulted to a block reward of 50BTC.

· In November 2012, the reward for mining a block was reduced to 25BTC after the halving at block height 210000.

· In July 2016, the reward for halving was 12.5BTC at a height of 420000.

· In May 2020, the halving reduced the reward to 6.25BTC from a height of 630,000.

· In May 2024 (estimated), at a halving height of 840000, the reward will be reduced to 3.125BTC.

Selective recognition, everyone's butt is crooked. Since it's all predictions, most people may only choose to believe the viewpoint that benefits themselves. After analyzing and discussing at length, people in the cryptocurrency community may simply say "too long, didn't read" and reply with a sentence like "your analysis makes sense, but don't analyze next time".

Discussion and analysis on the theory of cycles, whether it has a positive or negative impact, ultimately depends on which one people are more willing to listen to and believe in.

02 Halving vs meme

Expectations are in place, and everything feels right to do. Any news is interpreted as positive, and the market responds accordingly.

The famous "Ding Crab Effect" has always existed in certain stock markets, and investors are always nervous every time a TV drama starring Zheng Shaoqiu is released. The Ding Crab Effect is actually a typical manifestation of herd behavior, where most people may choose to follow the crowd and behave in a certain way because they are afraid of going against the mainstream view.

Compared to the Dunbar effect, the "halving effect" of Bitcoin seems to have more logic and theoretical support. As a key rule designed by Satoshi Nakamoto for the Bitcoin system, it has been repeatedly verified, undoubtedly continuously bringing confidence and expectations to everyone.

In the encryption market, strange things are commonplace, and currently many pure air memes are still being wildly pursued, let alone the halving with strong consensus. The market has become accustomed to the expectation of such special events every four years. We may even think that the halving has already been memed, and as long as the mention of the halving is coming, everyone's confidence subconsciously returns in an instant...

In fact, the encryption community and capital market need such a fuse to ignite FOMO sentiment. After each halving, various bullish market logics and analyses will be actively provided. Everything that happens will be interpreted as good news, and even continuous self-hypnosis...self-suggestion.

To put it simply, even if the theory of cycles is just a kind of superstitious belief, if enough people believe in it, it can easily become a consensus and a subconscious judgment similar to a "biological clock", forming a trend.

Just as people have analyzed the major bullish news of spot ETF for half a year and saw it fall instead of rise, the market is often not rationalized. People are more willing to believe in "when all the good news is out, it's bad news" and other "laws".

03 Bitcoin Halving, Bullish or Bearish?

Looking at the market after several rounds of halving, the cryptocurrency bull market cannot be solely attributed to the halving itself. It is mainly supported by different logics such as the outbreak of the digital gold concept, the outbreak of blockchain smart contracts, and the landing of DeFi applications. The future is full of variables, and the Bitcoin halving in previous years does not necessarily mean that good news will come immediately. On the contrary, the market often falls before and after halving. The Bitcoin halving can only be regarded as an important trigger for a big market, rather than a direct factor that brings about a bull market.

After the Bitcoin halving, whether it can bring a big market as usual, at least needs to consider these variables comprehensively:

Variable 1: Decrease in Miner Rewards and Increase in Production Costs

This is also the reason why Morgan Stanley analysts predicted that Bitcoin would plummet to 42,000 after the halving. Simply put, it is because the Bitcoin block reward will be directly reduced from 6.25 to 3.125 after the halving, and the cost of producing Bitcoin by miners will indeed increase significantly without breakthrough upgrades in computing power chips. Morgan Stanley analysts believe that the rise in production costs will have a negative impact on its price.

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