At the time of its launch in 2009, the value of Bitcoin was less than $0.01, but it took a handful of years to discover the economic potential of this new digital currency and that of an innovative technology that in the years to come would initiate the revolution towards a new world, the blockchain.
The value of Bitcoin and the new opportunities for speculation linked to it grew alongside the interest of the various economic operators who were entering a completely new market, that of crypto assets.
As a result of an analysis of the historical dataset from Bitcoin’s entry into the market in 2009 to today, the trend of its value has a positive correlation with that of gold and one of the main stock indices, such as the S&P 500, indicators of the general health of the economy.
From this observation, it is possible to understand that the price of Bitcoin, in addition to being strongly influenced by the direct relationship with its supply and demand, by the market expectations that investors have of it and by very important periodic events such as the halving, is also driven by the factors that characterize the real economy and that influence the investment behaviour of market makers present in the ecosystem, both wholesale and retail, in relation to their perception of the expectations, whether optimistic or pessimistic, on the future trend of the market.
The value of Bitcoin over time and the halving
During the course of its life, Bitcoin has undergone two halving events, in both cases responding with a strong increase in the following years. This suggests that events like this have a significantly positive effect on its value.
In fact, after the first one on November 28th, 2012 the value of Bitcoin went from $11 to $1000 in the following year. Before the second halving, Bitcoin was traded at $700 during the period of July 2016; in December 2017 it skyrocketed to a maximum value of $20,000.
During this period also the relative hashrate and difficulty values have increased to their historical highs.
On the other hand, the history of Bitcoin has also been characterized by numerous events that have cast doubt on its integrity, repeatedly testing its vulnerability through hacker attacks aimed primarily at tampering with large transactions or funds held by CEXs (Centralized Exchanges). These events most often resulted in a depreciation of the crypto due to a momentary loss of confidence in it.
To date, much of the exposure to these problems has been contained due to the improvement and development of the crypto world in general.
The increase that crypto investors have witnessed in the last two months, resulting from a rebound on an important level of support, may therefore be due partly to positive sentiment linked to the future of the new halving phase and partly to a slight optimism shown by investors for a partial reopening of the economy in this second phase of the virus.
Considering all the aspects analyzed in this article it is possible to imagine different future scenarios concerning the trend of the Bitcoin price. The world is still in the midst of the battle against Covid-19 and a slight relapse could again lead to a decrease in the newly gained market optimism, affecting a possible depreciation of its value.
In addition, it is also worth considering that the next halving is about to take place, which, by halving the BTC reward for miners, will reduce the addition of new units to the current supply. This, whether the volume of demand increases or remains constant, will result in an increase in the price of Bitcoin.
The idea of this overall scenario could thus either result in a forthcoming bearish price correction or a consolidation of a Bitcoin rally phase that will increase market euphoria as a consequence.