How the halving of bitcoin has affected the crypto landscape (so far)
On May 11, a new era for bitcoin began as the original cryptocurrency’s block reward was cut in half for the third time in its history – down to 6.25 BTC.
Given the potentially seismic implications of the halving, there was much speculation in the months prior as to what it will ultimately mean for the long-term value of bitcoin and for the state of the broader crypto markets. Many analysts have anticipated an eventual bull market period, based both on what we have seen following the previous halvings as well as several other key indicators.
Now that a few weeks have passed since the event, we are able to begin analyzing trends in the short term that may help shape the long-term condition of crypto.
Here are a few examples of how crypto markets have reacted in the weeks following the halving and how these signs may point to a bull era on the horizon.
Report highlights excellent post-halving health
A report from blockchain data and intelligence provider Glassnode showed the health of the bitcoin network to be near an all-time high in the days following the halving.
The report includes a newly generated metric from Glassnode known as the BTC Index (GNI) that combines several on-chain metrics to ultimately speak to the overall health of the network. In the days following the halving, Glassnode reported network health (a combination of growth and activity) had increased by six points.
The report also mentioned hashrate – a key indicator of the health of bitcoin – and the fact that it had rebounded nicely despite an initial drop shortly after the halving took place.
Another batch of figures from data provider Skew showed a sharp drop in implied volatility shortly after the halving took place.
Implied vols remain well supported despite the drop in realized pic.twitter.com/6k0cpV7JQP
— skew (@skewdotcom) May 26, 2020
This went against expectations as most analysts predicted volatility would increase, due largely to the great uncertainty surrounding the halving and it eventual impact.
It is important to note that a reduction in volatility does not necessarily mean a reduction in risk – but it is interesting considering what most expected to occur post-halving.
HODL waves suggest impending bull market
Another on-chain metric from Glassnode known as HODL waves point toward an impending bull market for bitcoin.
HODL waves focus on the data surrounding the creation price of bitcoin’s unspent output from bitcoin transactions (UTXOs). In doing so, the metric can help forecast the beginnings and ends of cycles, market tops, and bull markets.
Bitcoin’s current UTXO trend is similar to those that have successfully foreshadowed market upswings in the past.
Realized Cap HODL Waves –
Instead of using #Bitcoin supply by age, UTXOs in each band are weighted by their creation price.
The resulting realized cap age bands help navigate $BTC cycles, gauge market tops, and the start of bull markets.
— glassnode (@glassnode) May 26, 2020
Increased institutional foothold
Institutional adoption of crypto and blockchain is one of the keys to entering this tech into the mainstream, and we have seen a couple significant moves in the past month in that regard.
In April, Binance announced a $400-billion acquisition of CoinMarketCap in a move that surprised much of the crypto community.
Now, the largest crypto exchange in the U.S. – Coinbase – has announced its own acquisition of the brokerage firm Tagomi. The Tagomi platform is targeted at professionals and institutional investors and supports a wide array of digital assets ranging from bitcoin and bitcoin cash to Ethereum and EOS.
This is just the latest move highlighting an increase in institutional interest in crypto, which has continued to ramp up in recent months despite the global economic crisis.
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