Bitcoin Has Gained Heavy Popularity
According to some analysts, more people are beginning to direct their eyes towards the world’s number one cryptocurrency by market cap, which now seems like a relatively valuable and attractive financial tool given its newfound rarity. While bitcoin itself is widely in circulation – approximately 18 million BTC units have been mined over the years – the halving has seen to it that miners have their digital rewards reduced, which means that fewer coins are going to be handed out when new bitcoin blocks are extracted.
Something that’s less common obviously falls into the “rarer” category, and this is now applying to bitcoin. Miners saw their rewards fall from 12.5 BTC to about 6.25 BTC, and sometime in the year 2024, this is going to happen again. Miners will see their rewards fall to about 3.125, thereby making bitcoin even more speculative.
With countries printing money every five minutes as a means of combating the coronavirus and keeping their economies afloat, many people are turning to bitcoin and other assets as a means of hedging their wealth and ensuring their money is stable granted things turn ugly. Overprinting money can potentially lead to inflation and other problems, which means that fiat currencies like the U.S. dollar could lose some of their value in the coming weeks or months.
While analysts aren’t sure if this will happen, it appears the idea is circulating amongst the standard trading community, as many are now turning to BTC as a tool of securing their funds. In addition, the completion of the halving has made many people believe that the currency’s price is about to go through the roof, thereby granting gains to all who own BTC.
In an interview, Zac Prince – CEO and co-founder of Block Fi – compares the situation behind bitcoin to that of oil, saying:
Imagine if OPEC cut production in half overnight. What would happen to the price of oil? It would go up.
He is convinced that the price of a single bitcoin unit could easily strike six-figure territory and reach $100K within the next two years.
Can the Asset Keep Our Money Safe?
Michael Sonnenshein – managing director of Grayscale Investments – offers similar sentiment. He says that many people view bitcoin in a different light given the global economy’s present state. He comments:
This halving is transpiring at a time when governments are enacting unlimited amounts of monetary and fiscal stimulus. Bitcoin is now viewed as a safe-haven, kind of like digital gold. It’s a verifiable and scarce asset with predetermined and predictable supply.
At the same time, analysts like Adam Traidman of BRD says that bitcoin remains extremely volatile, and that while it could spike over time, he doesn’t think anything major will happen right away.