There is no guarantee that the price of Bitcoin will rise after half, warns ING Economist

• Bitcoin's quadrennial power outage event does not guarantee to raise its price, said Carlo Cocuzzo, digital finance economist at ING.
• The veteran said traders mistakenly compared bitcoin to fiat currencies, claiming that cryptocurrency was not even a currency.
• He partially agreed with the story of the Bitcoin value store, but doubted that he was optimistic.

For many Bitcoin enthusiasts, "halving" has set cryptocurrency over the $ 100,000 mark. But a veteran of digital finance does not agree with the euphoria.

ING economist Carlo Cocuzzo he says in a podcast interview

On Thursday, the quadrennial bitcoin event does not guarantee a big bullish movement. He cited the limited supply limit of 21 million tokens of the cryptocurrency as the barrier that stands between it and its higher price targets.

The Bitcoin blockchain forces miners to offer computing power to aggregate and manage transactions in the decentralized registry. In return, the network awards rewards to miners in freshly struck BTC tokens. The winners sell the newly accumulated prizes in the cash market to cover their operating costs.

But BTC rewards are cut in half every four years to keep inflation under control. That said, miners provide the same or more computing power to the Bitcoin network, but their likelihood of gaining BTC drops dramatically.

Over time, people who invest significant capital in Bitcoin registry mining machines would see their BTC rewards decrease, said Cocuzzo. He added that "in a moment the rewards will simply stop", leaving the miners with no return on their investments.

The story of the next trial

Cocuzzo's statements emerged even when two of the previous Bitcoin halves followed elaborate prices. The second drop in the supply rate in 2016, for example, resulted in a massive race that drove the price of the cryptocurrency from less than $ 500 to $ 20,000.

However, the price explosion was inspired by many other catalysts, in particular the famous ICO boom of 2017. The bubble crisis saw many blockchain startups raise funds by selling token-type bitcoin. Greed has led people to increase demand for BTC, inflating their price bubbles.

Demand plays an important role after the third semester. Popular narrative today says ongoing financial crisis led by the coronavirus pandemic. As central banks and governments expand their balance sheets with billions of dollars, stimulus assistance could leave fiat money, especially that of startups, under additional inflationary risks.

The bulls believe that the devaluation of their savings portfolio would lead them to seek the security of Bitcoin.

Bitcoin and Fiat are not the same

However, Mr. Cocuzzo said that the functions of fiat and BTC are very different from each other. Although Fiat comes with a specific use case, Bitcoin strives to function as a currency despite its limitation.

"Some Bitcoin bulls think their value would increase because their supply is limited, unlike what happens with other currencies," added Cocuzzo. "But Bitcoin is not a currency; not useful for transactional purposes."

He noted that bitcoin may or may not be a store of value. But in the end, nobody really knows its true value.

photo by Elizabeth Kay in Unsplash