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This week in crypto, the Bitcoin world prepared for Tuesday’s halving of the block reward, and the Libra Association appointed its first CEO. In the real world, countries began to ease measures designed to counteract the spread of the coronavirus pandemic after their citizens cried for freedom. But why live in the real world when you can wallow in cryptopia?
Bitcoin hits $10,000 ahead of Tuesday’s Bitcoin halving
This week, the Bitcoin world prepared for the upcoming Bitcoin halving, which is predicted to take place on Tuesday.
In the Bitcoin halving, the amount of Bitcoin that miners receive for minting new Bitcoin into existence will halve. This occurs roughly every four years and has historically been associated with a price rise.
While non-Bitcoiners sneer with cynicism at the much-hyped event, others are preparing for the halving by buying up lots of Bitcoin and preparing trades. The price even hit $10,000 a few times this week, before a flash crash on Saturday sent prices plummeting by 15%.
Despite that drop, Bitcoin has fully recovered from its March price crash, which saw the price of Bitcoin spiral down alongside global markets as the coronavirus pandemic and subsequent lockdown made its impact felt.
The halving has been preceded by a hive of activity:
New Bitcoin addresses have spiked by almost 50% since the beginning of the year, from 643,000 to close to a million; Bitcoin’s hashrate hit its all-time high ahead of the Bitcoin halving, meaning that miners are working harder than ever; and Bitcoin’s market cap surpassed $170 billion, suggesting that the market is bristling with activity ahead of the halving.
Investors, analysts and pundits are split over whether the halving will increase the price of Bitcoin.
Some told Decrypt that nothing exciting will happen. Simon Peters, a market analyst at trading firm eToro, said that investors who bought in Bitcoin’s dip could start to sell off their Bitcoin, potentially deflating Bitcoin’s price.
“I personally feel there is a 70% chance we’ll see a quick retracement / sell-off just after the halving. [We] may see $7-8k being tested again before pushing higher,” he said.
Aaron Henshaw, CTO of Bison Trails, said that it’s foolish to try and predict the future price of Bitcoin, but that markets have become more efficient, “because there’s more money in them and more sophisticated participants. There are more people and more complex products. So we might not see such an insane run up,” he said. This would mean that the halving wouldn’t budge the price much.
But others told Decrypt that the halving will positively impact Bitcoin’s price. Pankaj Balani, CEO of Delta Exchange, said that traders on his exchange have been “extremely bullish into the halving,” and that many think that Bitcoin will push past $11,000 before Tuesday.
Sinjin David Jung, managing director of the International Blockchain Monetary Reserve, is equally bullish. “Hell, you have the biggest acts of [quantitative easing] happening in every market and the halving is happening at the same time,” he said. “With most other currencies other than the US dollar taking a beating, we can forget talking about $10k; this is going to be Bitcoin’s convergence of singularity.”
But, even if the halving itself doesn’t cause an increase in price, it’ll certainly bring more users to the space.
So says Binance.US CEO Catherine Coley: “At Binance US, we’ve seen user registration triple over the last several months. Confidence in legacy institutions has been shaken by this unprecedented economic crisis, so major financial players and general consumers are seeing the merit in the financial freedom and opportunity offered by digital assets.
“Personally, while Bitcoin’s price is never predictable, I stay bullish on Bitcoin’s growth as more and more people get involved,” she said.
All eyes will remain squarely on Bitcoin this Tuesday.
Paul Tudor Jones is bullish for Bitcoin
The Bitcoin halving has even brought major investors on board. Paul Tudor Jones, a legend in Wall Street circles, wrote on Thursday in a letter to investors that Bitcoin is a wise investment.
“At the end of the day, the best profit-maximizing strategy is to own the fastest horse… If I am forced to forecast, my bet is it will be Bitcoin,” he wrote.
He clarified: “I am not an advocate of Bitcoin ownership in isolation, but do recognize its potential in a period when we have the most unorthodox economic policies in modern history.”
His conclusion is a response to the huge amount of money printing that has occurred since the coronavirus pandemic, which has left him “speechless.” It is, he says, “an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”
Bitcoin’s inflation is determined by its own hardcoded monetary policy—see: the halving, above—makes it “literally the only large tradeable asset in the world that has a known fixed maximum supply.”
Given the move toward digital forms of cash, Jones thinks that Bitcoin is a great store of value for tough times ahead.
Libra gets a CEO
While Bitcoin has its week, month and year, the Libra Association—the controversial kinda-stablecoin network led by Facebook, this week appointed its first CEO.
His name is Stuart Levey, and he’ll start the job this summer, after vacating his current post as Chief Legal Officer for HSBC. He used to be the Under Secretary of the Treasury for Terrorism and Financial Intelligence—he held the position in both the Bush and Obama administrations.
An Andreessen Horowitz partner who was responsible for sourcing Levey thinks he is up to the job. Levey possesses “the rare combination of an accomplished leader in both the government, where he enjoyed bipartisan respect and influence, and the private sector,” said Katie Haun.
Levey will have his work cut out for him from day one. He’ll oversee the launch of Libra, which is slated for the second half of 2020 (after delays—it was originally supposed to launch in the first half of 2020).
If it ever launches, that is: Libra has faced immense scrutiny from regulators and private companies, who are worried that Facebook and a group of private companies are trying to become the world’s central bank. The Libra coin’s value is pegged to a basket of fiat currencies, the ratio of which the Libra Association controls. That removes power from central banks, which work in the public interest.
Of the 28 companies that planned to join the Association when it was announced in July 2019, eight have since dropped out, among them eBay, Visa and Mastercard.
The design for Libra has since been slightly revised. Now, Libra will put out a bunch of fiat-pegged stablecoins, and the value of the Libra coin will be pegged to these stablecoins. Whether the changes will be enough to soothe the ire of regulators is uncertain. The Association surely hopes that Levey will sort things out.