Bitcoin’s third halving is on its way. Whether it will spur a bull market or not has also become a frequently discussed topic in the crypto space. Gate.io Research analyzed the influences that the Bitcoin halving could bring to different stakeholders and the security issues it might cause. We also looked closely at the halving’s impact on miners, and concluded that only when the price of Bitcoin increases that miners can still gain a certain level of profit and maintain the stability of the Bitcoin eco.
By observing and analyzing the price fluctuations and the relative contributing factors before and after the previous two Bitcoin halvings, and comparing the price difference of Litecoin before and after its last two halvings, we can conclude that halving can boost the price, but it also rai concerns amongst miners.
To better understand the impact the next Bitcoin halving will bring, Gate.io research has monitored on-chain data such as the number of addresses and trading volume of Bitcoin over the past year and analyzed the recent variations of market sentiment, regulations, and the social environment. Based on the analysis, we believe that Bitcoin has become more mature and stable as an investment. We also applied modeling analysis of miner's cost of income and simulated the price of bitcoin with Monte Carlos Simulation. We have determined that most miners will not suffer from losses in most cases if they intend to hold Bitcoin long term.
- Bitcoin halving has an impact on multiple stakeholders, amongst whom the miners are the most affected. With the possibility of miner’s income decreasing, miners might stop mining or maintaining the network, resulting in security issues.
- The price movements before and after the previous Bitcoin halvings were basically in line with the scarcity principle of economics. However, the price movements of Litecoin before and after its two halvings were different from those of Bitcoin.
- By observing the on-chain data, Bitcoin has developed to be more mature and stable as an investment asset. Besides, with the general investor sentiment being more positive, and an increase of regulations being proposed in more regions, the social environment is also becoming more friendly towards Bitcoin.
- Despite all the uncertainty factors, based on our simulation of the variation of Bitcoin price and miners’ cost, we believe that if miners hold Bitcoin for the long term, the probability of suffering from losses is small. This could also affect market performance after the halving.
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Disclaimer: This research is a study based on observed market data. Though we have attempted to be as diligent and accurate about the data as possible, it cannot guarantee a 100% accuracy. This research should not be used as a reference for your investment.
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March 01, 2020