On Monday, the Bitcoin block reward reduction was finally cut in half.
It was an exciting event hosted by tens of thousands of cryptocurrency investors, with thousands of people participating in the celebratory live streams, tens of thousands who liked the tweets in the middle and hundreds of thousands hearing about Bitcoin via news.
The halving was so popular that at one point the subject was in vogue on Twitter in the United States. United States, United Kingdom and Canada (and possibly other countries). This happened soon after he did the same in China.
We have the Bitcoin semi-trend!
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– Tim Copeland (@Timccopeland) May 11, 2020
Although resolutely optimistic for Bitcoin in the long term, analysts believe that an "extreme" capitulation could take place in the coming days. But this can only be a short-term problem in a long-term bull market for cryptocurrency.
Bitcoin could be subject to yet another "extreme capitulation"
Matt D’Souza, hedge fund manager and CEO of Blockware Mining, Explain after halving the fact that Bitcoin miners are at risk of "extreme surrender".
The miner noted that, according to his company data, about 30% of the network's hash rate is currently made up of mining machines that now operate at a break-even price after being cut in half.
If the price of BTC goes from $ 8,550, indicates the level of balance of D’Souza, or if the network hash rate increases from there, these marginal miners will be forced to shut down their machines.
Digital asset manager Charles Edwards echoes that feeling, noting that their analysis indicates that the global average cost of mining a Bitcoin has dropped to $ 14,000 after being cut in half.
Not really a bad thing
Although the "capitulation" sounds scary, especially since it was associated with the collapse of Bitcoin in late 2018, it is not exactly a bad thing.
As a leading financial podcaster and Bitcoin bull Preston Pysh Explain in response to D’Souza’s analysis:
“During the 2016 halving, the price went aside for 9 days, then fell 28%, and it took 100 days to return to the price by half. Prepare mentally for effective cleaning and adjustment of difficulties, as the protocol prepares all passengers for launch. "
During the 2016 halving, the price moved sideways for 9 days, then fell 28%, and it took 100 days to return to the price by half. Prepare mentally for effective cleaning and adjustment of difficulties while the protocol prepares all passengers for launch. pic.twitter.com/5dNcs0ZnJ1
– Preston Pysh (@PrestonPysh) May 12, 2020
The key element of this declaration is that it "prepares all passengers for launch".
Data compiled by Charles Edwards suggests that after each Bitcoin mining capitulation, which is often followed by capitulation by larger crypto investors, there has been a sharp increase.
The following table shows this, as it shows that whenever the surrender was signaled by the Hash Ribbons indicator, what followed was a massive increase in the macro to the maximum levels.
Hash band indicator return | Source: Charles Edwards
Whatever happens with this potential surrender, many claim that Bitcoin's long-term trend remains bullish.
According to previous NewsBTC reports, a major cryptocurrency trader said he "struggled" to see a bearish argument for the BTC in the long term, citing the macroeconomic environment, halving it and the dynamics of exchanges.
Photo by Jackson David on Unsplash