BitOffer: What If the Bitcoin Price Does Not Rise After the 3rd Halving?
As we know it, the 3rd halving, which is expected to happen in May 2020, has been considered as the “BULL” signal by most investors even the bitcoin price has been through a huge decline as a whole during the second half of 2019.
It is hard to deny that Bitcoin is a rags-to-riches myth which has risen from a “pizza” price to a peak at about $20,000. The highest growth has even been reached 8 million times. And one common thing I’ve noticed is that super bull markets came out when the last two halvings happened. So, it causes most investors are expecting the 3rd halving.
Why do most investors expect the bull market to happen after the 3rd halving?
It is quite simple that the total volume of bitcoins is 21,000,000, and all the bitcoins will be mined out in around 2140. Before the 1st halving, each block reward is 50 bitcoins. After that, the block reward was reduced to 25. Then, it was reduced to 12.5 bitcoins after the last halving. When the 3rd halving of bitcoins comes, each block reward for miners will be reduced to 6.25 bitcoins. As the output of new bitcoins becomes less and less, the tight supply of bitcoins will lift the price of bitcoin in a high extent. Thus, most investors hold the view that the bitcoin price will increase sharply after the 3rd halving.
Overall, the expectation for a bull market is commonly accepted by most investors. However, what if the bitcoin price does not rise after the 3rd halving?
Once the halving happens, the difficulty and the budget of bitcoin mining will be extremely increased. As the miner machine and the hashrate upgraded, plus the electricity bills become more and more expensive, a large number of the old miner machines have to been closed.
Recently, Antminer S9, which was popular in the bitcoin mining industry, has been announced the shutdown.
If the bitcoin price continues presenting a downtrend, miners would be possible to kick away the miner machines, which could directly trigger a mine disaster.
In fact, investors in most financial markets have the common point that they acquiesce the market will present an uptrend. And this thought is dangerous because fluctuations are a normal factor in every market, including the bitcoin market after the 3rd halving. No one has the ability to promise that the bitcoin price will gain after the 3rd halving. So, in this context, HEDGE is the most necessary thing. For the investors in the spot trading market of bitcoins, financial derivatives (futures and options trading) is the easiest solution for hedging.
Due to the futures trading is too risky, most normal investors are not able to control the risk so that bitcoin options is more suitable to hedge the risk when you hold bitcoins. For example, BTC Options on BitOffer, a bitcoin mercantile exchange, requests 0 fees, 0 margins, and users do not need to exercise the contracts. It is obviously the best hedging tool ever!
Then, how do we hedge the risk by options trading?
For example, now the bitcoin price is $7,000, you would earn $1,000 from the spot trading market if the bitcoin price rises to $8,000.
But what if the bitcoin price drops to $6,000? Without hedging, you would directly lose $1,000 from the spot trading market.
But if you buy a put contract on BitOffer with only $20-$50 to hedge the risk of holding 1 bitcoin, you would earn $1,000 with one put contract on BitOffer Options. In this way, you will save $1,000 loss in holding 1 bitcoin.
The bitcoin price is highly supposed to rise after the 3rd halving. History always repeats itself. Now the bitcoin price is about $7,000, after the halving, it is expected to boom for at least twice.
If you hold bitcoins, then your profit is likely to be up to 2x. But if you take this chance and purchase bitcoin ETF, then your profit would be more than 6 times. For instance, BTC Leveraged ETF launched by BitOffer in December. Different types of BTC Leveraged ETF have the same features of “Buying Long & Short”, “No Margins” and “No Liquidation”. This product will be managed by the professional financial team. With the automatic positions adjusting mechanism, even the drastic drops happen on the bitcoin price, BTC Leveraged ETF will never be at risk because of its features of “Highly Profitable but Low-risk”.
