[Ko Ran] Bitcoin demand more important than supply

[Ko Ran] I thought things would turn around for the better. I thought bitcoin prices would surge, triggered by the halving of bitcoin's block rewards, which any coin investor have their fingers crossed. On May 8, the price of a exceeded 12 million won. The global market value recovered to $10,000. Everything returned to the level before Covid-19. Expectations were building that the price would surge “to the moon” after the halving event. That was until the clock struck 9 a.m. on May 10, Korean time. In just an hour between 9 and 10 a.m. bitcoin prices tumbled more than 10 percent. The market, which was dominated by the fear of missing out was instantly replaced with fear, uncertainty and doubt. So what’s bitcoin halving, which many bitcoin traders have expressed a strong interest in? #Halving lowers reward, not supply Miners are rewarded with bitcoin when creating blocks. In 2009, 50BTC was rewarded for every block created. Satoshi Nakamoto, who was tired of the legal tender system that allows unlimited printing of currencies, limited the total number of bitcoins to 21 million. The means of keeping the number of bitcoin in check is halving. When the block reaches 21 million, the reward is halved. On average, bitcoin halving happens roughly every four years. As halving happens every four years, by 2140 the reward drops to nearly zero. As such, there is speculation that mining would end in 2140. There had been two halving events previously. The first was on Nov. 28, 2012 and the second July 9, 2016. Every time a halving happens, the reward cuts in half. Per block, it has fallen from 50 to 25 and to 12.5. As of May 12 at 5:30 a.m., the block reward dropped to 6.25. #Market swayed by investors’ sentiment, not mining reward Cointelegraph, a media outlet that specializes in cryptocurrency, on May 8 published an article on a discussion among eight Crypto Valley experts. The core message of the article was that the coming bitcoin halving would be different from those of the past. One of the comments made by one of the experts caught my attention, as I shared the same view. Arnaud Salomon, CEO of Mt Pelerin, said, “The power has shifted away from miners. They’re not in the same position as they used to be 10 years ago or even five years ago ... The stock is already so big and because today there is a lot of bitcoin in circulation, people are willing to trade and exchange.” The reason bitcoin prices went up before the halving was not because of the quantitative factor, where the quantity of supply will be reduced because of the halving. Currently, it is the psychological and the qualitative factors of a majority of investors, believing prices went up in the earlier two halving events, that is having a larger influence on bitcoin prices. In several Twitter surveys, a majority projected bitcoin prices to tumble after the halving. The survey results reflected the true sentiment of the majority of investors at the moment. #Rani‘s note: The price is determined not by supply but by demand In the past, when the bitcoin market was small, miners' influence was huge. Between demand and supply, supply has had a larger influence on the market. But today, with the bitcoin market having grown large, demand has become more important than the supply. Rather than halving issues on supply, increased demand for bitcoin due to the unlimited quantitative easing by central banks across the world led by the U.S. Fed will have a much larger impact on the market. It is likely that the increase in demand for “digital gold” will lead the bitcoin price. ※The writer currently invests in bitcoin

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