Financial Markets Radar Against Bitcoin Halving News

Rubikkav
Rubikkav
May 4, 2020 · 11 min read

This week financial markets are entering a phase of slight recovery. We have already seen from the last months ago how many assets reached many floors below zero degrees. We saw the oil fall on the ground, it was reported that a multimillionaire lost a lot of money and above all, we are seeing how the communism of a country is causing many people to begin to lose faith.

Basically this new editorial note will serve two things: (a) we bring you the questions and answers about the Bitcoin halving event and (b) five things that we must watch out for in the financial markets this week.

The Most Awaited Event For Everyone

To understand about Bitcoin Halving, we need to first understand how Bitcoins are created. So here we go:

A new batch of Bitcoins is created, on average, every 10 minutes. They are created and distributed as a reward to miners who verify and validate transactions on the Blockchain network.

When Bitcoin was created in 2009, that reward was 50 Bitcoins per block mined. This means that every 10 minutes, the system generated 50 Bitcoins. But there is a rule that, approximately every 4 years, this reward is reduced by half. That is, every 4 years, the reward generated per block drops by half.

Now that you know how a Bitcoin is born, let’s go to the main question:

Halving (from the English “Half”, which means half) is the process that halves the reward generated by the network for the work of the miners. As we said, when Bitcoin was created, that reward was 50 Bitcoins per block mined. In 2012, in the first Halving, the reward was cut in half (half), increasing to 25 Bitcoins per block. In 2016, there was the second Halving, when the reward increased to 12.5 Bitcoins per block.

That is where we are today. And in a few days, we will go through the third Halving of the network, when each block will generate a reward of 6.25 Bitcoins, which is exactly half of the current 12.5. Now that you are already an expert and know how a Bitcoin is created and know exactly what Halving is, let’s go to the third and most important question:

Come on! Bitcoin is a digital currency. It doesn’t belong to any country, government, central bank or anything like that. This is even your biggest advantage over “common” currencies like the Dollar, Euro, Real and etc.

As we said before, Bitcoins are created as a form of reward for the miners of the Blockchain network, who validate the transactions of the network itself. These validations are done by computers. As we know, information technology evolves very quickly and computers that 10 years ago were extremely advanced, are now “scrap”.

Predicting that this evolution would be constant, the creator of Bitcoin, known as Satoshi Nakamoto, created Halving to “make life difficult” for miners. The rationale is this: if computers get too advanced, it will become increasingly “easy” to mine Bitcoins on the network.

What previously required a supercomputer, could be done with a home notebook or even a cell phone. If that were to happen, the world would see a “flood” of available Bitcoins, and this could generate a deflation in its price.

It is the well-known Law of Supply and Demand: if a good has much more supply (available Bitcoins) than Demand (people wanting to buy Bitcoins), the price tends to fall.

With the creation of Halving, that doesn’t happen. A good way to understand is to make a comparison with Gold. Why is Gold expensive? Because it is scarce. If it were possible to mine gold anywhere, without any difficulty, Gold would have the same value as a “common” stone that we find in the streets in droves.

Perfect! So I already know how a Bitcoin is born, I know what Halving is and I know what it exists for. The last question is:

That’s the million dollar question! There is no guarantee that, right after Halving, the price will skyrocket. But, going back to the Law of Supply and Demand, it is undeniable to estimate that with the passing of months and years, the trend is rather of a very sharp increase.

The positive news is that by the time this article was written the Bitcoin Hash was already reaching its all-time highs.

According to Glassode’s charts, the Bitcoin network hashrate is very close to breaking its historical record. It should be remembered that the network’s historical maximum was 137.31 Exahash per second on March 1, 2020. Currently Bitcoin’s processing speed is 132.79 Exahash per second.

Alejandro de La Torre, vice president of the mining pool Pooling.com, noted that after the mining reward at Bitcoin Cash and Bitcoin SV was halved, a large number of miners have migrated to the Bitcoin network. The appeal of mining on the Bitcoin network for these miners has been evident since the beginning of March if you look at the hashrate graph.

The low profitability in the Bitcoin Chash and Bitcoin SV networks has not been the only reason why miners have decided to migrate to the Bitcoin network. According to CoinMarketcap data, on March 24 the difficulty of mining the Bitcoin network decreased to 13,913 Teras.

This also made mining in Bitcoin more attractive to miners. Since then, the difficulty of the network has been increasing until reaching 15,959 Teras, and according to Cryptothis, it is expected to exceed 16 Teras in the next adjustment in the early hours of this Tuesday.

As Bitcoin’s halving approaches, the hashrate of the network has been increasing. However, decreasing the mining reward could have a negative effect on this metric according to De La Torre. He noted that since China has a monopoly on the new generation of miners, Bitcoin’s hashrate could drop as much as 30% after halving.

criptonoticias reported comments made about the upcoming halving’s involvement in Bitcoin’s processing power. De La Torre said that as the European and North American markets have less capacity to obtain state-of-the-art mining equipment, this would impact the Bitcoin network.

After the next Bitcoin halving, the S9 generation of miners will be obsolete. And according to De La Torre, this generation of miners represents around 30% of Bitcoin’s processing power. In addition, various ecosystem experts have taken into account historical network data to point out that a drop in hashrate can be expected after halving occurs.

The exact date on which this event will take place is estimated for May 11 and 12 of this year.

During these days it is expected that there will be a high volatility in the crypto market. Therefore, it is good to position yourself.

In our case and before the estimated date, we are studying the best stage to guarantee the best use of this event and thus obtain good profits.

Months ago and with the Bitcoin Cash halving event we had a good experience, we believe that with the father of cryptocurrencies it will be no different.

What We Have Pending?

The April US employment report will grab attention this week, aside from details on the depth of the economic consequences of efforts to stem the spread of the Coronavirus Pandemic. The figures are expected to be historical as reported investing.

Markets will also watch for progress in some US states and many European countries as they take cautious steps to revive their economies. Trade concerns could once again be the focus of attention after US President Donald Trump stepped up his anti-China speech, and we will be on the lookout for oil prices looking for signs of continued strength afterward. that historic production cuts took effect on Friday.

Meanwhile, the Bank of England will hold its monetary policy meeting on Thursday and publish its latest economic forecast and its assessment of financial stability. This is what you need to know to start your week.

The Labor Department releases its April report on non-farm employment on Friday and the overall picture is expected to be bleak, and economists forecast a loss of 21 million jobs.

This occurs after the 701,000 decline in March, which ended the 113 consecutive months of job growth. Everything indicates that the unemployment rate will shoot up to 16%.

More than 30 million Americans have applied for unemployment benefits in the past six weeks, or more than 18.4% of the working-age population. Restrictions such as confinement and social distancing to mitigate the spread of the Coronavirus have paralyzed commercial activity.

The data is likely to add to the enormous pressure on states to revive their economies despite the fact that the number of Coronavirus cases continues to rise in many parts of the country.

US President Donald Trump said on Friday that raising tariffs on China is “certainly an option” as he is considering ways to punish Beijing for its alleged lack of containment of the Coronavirus.

“A lot is happening with regard to China. We are obviously not happy with what happened. This is a bad situation — for everyone, 183 countries. But we will have a lot to say about it. It is certainly an option. Doubt is an option, “Trump has told the press.

It is unclear whether Trump will risk the collapse of his trade deal with China, but he will keep in mind the threat that the number of Coronavirus deaths and economic deterioration pose to his chances for re-election in November.

Many European countries are gradually reactivating their economies; Italian factories and works will resume their activity from Monday after the longest blockade in Europe.

Germany’s schools, museums and churches will also reopen after the reopening of small businesses, while the UK will establish its de-escalation strategy in the coming days.

Governments are wary of a second wave of infections, but the European Central Bank has forecast the euro zone economy to contract by as much as 15% this quarter, so authorities are also interested in restarting activity.

Meanwhile, governors of about half of the United States have partially reopened their economies over the weekend, topping Georgia and Texas.

As of Saturday, the number of reported infections across the United States had climbed to more than 1.1 million, including about 65,000 deaths, according to a Reuters count.

The Bank of England is not expected to make any monetary policy changes at its meeting on Thursday, after cutting interest rates twice in March to 0.1%, new lows, and increasing its purchase of government bonds by about historical £ 200 billion.

Instead, investors will focus on the publication of their new economic forecasts and the interim financial stability report.

The Bank of England will announce its latest monetary policy decision at 12:00 (CET), rather than the usual publication time at 18:00 (CET), in order to accommodate the joint publication of the interim financial stability report, which assesses the impact of the Coronavirus pandemic on the financial sector.

Bank of England Governor Andrew Bailey will hold a press conference after the monetary policy meeting.

Oil prices rose on Friday as OPEC and its allies embarked on record production reductions aimed at reducing glut after the Coronavirus crisis decimated global energy demand.

The world benchmark oil, Brent crude oil, has lost almost 60% of its value so far in 2020 and registered 21-year lows last month as the pandemic has weighed down on demand and OPEC and other producers have extracted oil at its discretion before signing the new production agreement that took effect this Friday.

The Organization of the Petroleum Exporting Countries, Russia and other producers, the group known as OPEC+, has agreed to cut production by 9.7 million barrels a day from May 1.

Still, some analysts doubt that this reduction, the largest ever agreed, is sufficient, as demand is unlikely to recover quickly.

See you in the next story! With love 💛 Rubika Ventures® Team!

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