Cryptocurrencies had a great year in 2021. In this period, we have seen the market go from being classified as a billion-dollar economy into a trillion-dollar economy. Aside from that, cryptocurrencies are gaining visibility in the mainstream world with, for example, El Salvador's adoption of Bitcoin as the official digital currency. As a result, investors are looking for the "new Bitcoin" on the market, hoping to find a great alternative in so-called altcoins. Unfortunately, many traders value an altcoin exclusively…
A cryptocurrency market crashed has ensured thanks to the coronavirus pandemic. However, crypto experts believe the crash has reduced the risk of a halving price dump and has possibly started a Bitcoin bull run.
Chris Bendikson of CoinShares sees last month’s crash as helpful to miners. It gave them early preparation for the halving by limiting the sudden effect halvings have on their profitability. Miners with outdated equipment had time to either stop mining or upgrade.
Bendikson expects the mining industry to emerge stronger following the halving event. The expectation is due to a lower cost base despite high expected volatility. He even pointed out the positive effects of Bitcoin’s mid-term bull run. Miners may not need to sell much of their mined coins as before the halving.
Another CoinShares personnel, Alex Laughton-Scott also contributed to the discussion. He views the crisis as helpful in sensitizing people on Bitcoin’s benefits. After having observed that there were no changes in the worldwide fundamental setup, he thinks it may reveal the uses of Bitcoin and the entire value chain.
Scott anticipates the possibility of a perfect storm coming up for Bitcoin in the medium term. He believes that during a crisis, every correlation gravitates towards the same direction.
The low market capitalization had adverse effects on prices according to him. There was a rapid BTC price decline in mid-March when compared with the more traditional assets. Stop losses and automated trades also accelerated the high volatility phenomenon. But with the declining correlations, Bitcoin’s extended recovery will possibly boost institutional demand.