As the Bitcoin’s halving approaches, many are wondering whether it will double Bitcoin’s price to compensate for the halved supply, or will lead to a downward spiral and a depressed price due to the growth of confirmation delays.
On July 11th, only two months away, supply halves. Prices should increase, assuming demand remains constant, with many Bitcoiners hoping that the halving will trigger a fourth moon bubble comparable to the stratospheric rise in 2011, Spring 2013 and November 2013. Some argue, however, that this time it may be different because for the first time in its history Bitcoin has a capped transaction capacity. Transaction volume and price
The relationship between price and transaction volume has been identified as early as 2013 with the following chart showing a remarkable correlation: Bitcoin’s Metcalf’s Law – Source: Peter Rizun Due to Bitcoin’s transaction cap, the price has recently seen what many commentators suggest is an unprecedented level of stability, inching towards the range of $470. It may yet break higher, especially as we get closer to the halving, but such breakouts are usually followed by an increased level of transactions, which causes increased delays, leading to complaints and a potential break on price advances.
If this pattern is repeated and the price does not compensate for the reduced supply, the least profitable miners may turn off their hashrate, leading to further mining centralization. Concerns
Concerns have been raised that during the two-week period between miners turning off their hashrate and difficulty readjustment, confirmation delays may be exacerbated as blocks take longer to be found. This leads to an increase in fees and a reduction in price, making even more unprofitable miners turn off their hashrate in what may be a downward spiral.
In response to such concerns it is likely that huge mining farms have […]
