Posted on May 11, 2020
Bitcoin’s gravitational pull
It is a major event that will take place in just a few days. And this at a time when major events are still forbidden due to the Covid19 and even small meetings are still shunned or only attended with queasy feelings.
The event we are talking about is Bitcoin experiencing halving in its block reward. Whether this very incident is officially called the Bitcoin halving or rather the Bitcoin halvening seems to have not yet been clarified completely. Nevertheless, the upcoming event has led to the fact that more and more people, especially in more popular circles and mainstream media, have once again started to speak and speculate about Bitcoin.
After the Bitcoin price had plummeted from its all-time high after the 2017 hype, the majority of comments and analyses turned silent, especially after the cryptoasset was written off as a dead thing belonging to the dust bin of history. For many an economist or journalist, it is, therefore, all the more surprising that the general public suddenly starts talking about Bitcoin again a few years later. Therefore it is only obvious for media, communications, and even PR channels that the Bitcoin halving is a relevant topic to write about. The numerous scribblers and writers of our information age feel obliged to do so, freely according to the motto: “People are marching again; I have to find out where they are going so that I can lead them!
The curse of wrong timing
Meanwhile, it seems that more and more the value proposition of bitcoins can be understood. With the Bitcoin halving, the block reward, which the miners receive as compensation for maintaining the Bitcoin network, is halved for the third time. It’s happening on May 12 and Bitcoin units will be cut from 12.5 to 6.25, so less Bitcoin is produced approximately every ten minutes. As a result, Bitcoin’s “inflation” will fall from 3.6 to 1.8 percent, which will be the first time it will have fallen below the core inflation rate of 2 percent per year generally pursued by central banks.
The halving makes Bitcoin generally considered to be scarcer, whereas the opposite seems to be the case for national currencies as of late: central banks around the world are ensuring that national currencies are increasingly inflationary.
In view of these diametrically opposed conditions, Bitcoin appears particularly attractive as an investment, especially since the new supply will decrease with each additional halving. So if one of these halvenings is just around the corner, it is probably high time to buy Bitcoin as well, the general public seems to think. Pushed by the media, accelerating FOMO, the famous “Fear of Missing out”, is spreading and metastasizing.
However, the fear of missing something, impatience and the associated stress are not good advisors. Anyone who thinks they have to get in before the halving can only be disappointed. Bitcoin is ultimately a so-called “long-term play”. In the short term, uncontrolled buying frenzy repeatedly triggers panic-like sales spirals. Anyone who has bought his way to the top and then sees his Bitcoin investment, which is predestined for a world of cheap money, fall suddenly and violently in price, is likely to throw Bitcoin to the wind as a volatile Ponzi scheme.
Many more chances to buy
Bitcoin ultimately demands endurance and intrinsic motivation. Both of these factors mean that you can join Bitcoin once, for example, miners have capitulated and their bitcoin treasuries are empty, the so-called “weak hands” have sold all of their Bitcoin stash and the media has retreated from their writing mania. Anyone who buys at this point can take a more relaxed approach to a bright future and the management of his Bitcoin investment.
At a time like ours, the price of Bitcoin will pump many times and then drop again. This really seems to be pre-programmed by its essence and programming code. So there will still be many good buying opportunities. Moreover, as an absolutely scarce asset, Bitcoin seems to be programmed to absorb more and more liquidity as a monetary black hole. The fact that Bitcoin is also a global phenomenon naturally contributes to this. So there is absolutely no reason to panic or FOMO. Resist the force!