Good day MetaMiners!
In the following research, we want to analyze some observations related to the architectural and ideological component of BTC. Conclusions that we will make today do not claim to be the absolute truth, however, we can objectively assess many events from the point of view of the already established history and put forward a number of hypotheses. We will continue to consider the Bitcoin mining industry from the most objective point of view - a technical one. We will consider the same historical data as we did a year ago, as well as new introductory data, which, at the time of publishing the last study, we could not evaluate at all. We will partially repeat the information that we considered Halving of Bitcoin on 21.05.2021 and we will supplement them with several new circumstances that can radically change our view of the mining industry and its current state.
Last time, we definitely noticed that every halving of Bitcoin is accompanied by an explosive growth of all possible metrics - from the price of the currency itself to the number of active wallets. We believe that this happens according to the following scenario, for convenience, we suggest importing some variables:
Let's assume that at the moment the reward for the block = X BTC.
Cryptocurrency liquidity is a parameter by which it is possible to determine the impact of buy and sell transactions on the exchange value of an asset. Instruments with low liquidity tend to suffer from frequent price changes. And, conversely, the higher this indicator, the less volatility is characteristic of cryptocurrencies. Liquidity includes both the asset and the funds that participate in the trading of this asset (Y and Z)
Under the condition of constantly increasing demand ”2A→ 3A→ 30A→...”, increasing liquidity Z and maintaining a stable supply “B” (quantitative supply is exactly what halving and network difficulty affect, respectively, theoretically we have the most stable supply in the period between halving), as well as the growth in the number of miners “2G→ 3G→ 5G→...” ( and in this regard, an increase in network difficulty = a decrease in reward for the block ) we, according to elementary logic, observe an increase in the price of asset “C”.
At the moment, a little more than 2 years have passed since the last Halving of Bitcoin. This time pleased us all with incredible growth and profits. The medium-term earnings of miners remained at a very high level in this cycle, while the price of the first cryptocurrency increased by a multiple. Bitcoin mining has remained profitable and fair over the past 12 years, and the above data allows us to predict the continuation of the trend.
Today, the crypto market is experiencing some recession and correction, painful for speculators and neutral for long-term buyers. At such moments, the market clears, speculative trades fade into the background, and only long-term investors remain in the first place. Cryptocurrency flows “from weak hands to strong ones”, as it has been happening for many years, with one single goal - to become better distributed ledger.
