Many positive macroeconomic factors are falling in Bitcoin’s favour, does this mean they have mediated the expected post-halving dip? Is the expected Bull run sooner than most people think?
Bitcoin dropped down to around $8,600 this week, a value already visited this month. To many, this signalled the start of a massive price correction. However, it is a correction yet to be seen.
Many are starting to wonder whether this indeed has been the post halving slump that the crypto world has come to expect. Comparisons with previous halvings have potentially been rendered incongruous due to the unique global economic climate the world finds itself in light of the current pandemic crisis.
The question now remains of whether these global factors have actually mediated the expected sell-off, to the point wherein the near future, when the downward pressure of the post halving abates, the upward pressure of these factors will initiate an impressive bull-run.
Further aid given to help in the recovery
Europe has just agreed on a €750 billion aid package to help economic and social recovery from COVID-19. They join the likes of America and Japan who have so far spent 2.3 and $2.2trillion dollars respectively on similar financial stimulus.
With such an increase in money supply, Bitcoin’s deflationary model ought to provide an incredibly competitive store of value. It should also be noted that in countries like the US where part of this stimulus is given directly to citizens there is even more scope for cryptocurrencies like Bitcoin to be bought immediately.
Not only are central banks printing more money to deal with the crisis but negative interest rates continue to worsen. As these rates become more severe, more people will be driven to alternative safe havens to store the value of their assets. The decentralised nature of cryptocurrency and the immutability of the technology they are built upon, hold the answer.
A simple question of supply and demand
Grayscale, a large crypto investment institution, has been buying Bitcoin at an eye-watering rate as of late. In fact, they have been buying more Bitcoin that is being mined.
Kevin Rooke tweeted on the 28th of May, that since the halving, Grayscale has bought nearly 19,000 bitcoins. This is a greater amount than has been brought into circulation over the same time-period, or more accurately, 150% of all the Bitcoin that has been mined since the halving.
If Grayscale is buying up more Bitcoin than is being produced, the total available supply is dwindling. As supply decreases, demand increases and so too will the price.
With all these factors at play, the stage seems set for the bulls to take control once again and herald an exciting era for cryptocurrency.