Bitcoin Halving Impact Fades as Demand Takes Center Stage
According to reports, the Open Interest in Bitcoin is now 30 times higher than it was 11 days before the 2020 Bitcoin halving.
If 2020 has taught us anything, it’s that everything can turn on a dime – and that knock on the effect on the economy can yield interesting results across the financial sectors. While fiat currencies have struggled, safe-haven assets have benefitted from this year. Bitcoin and gold, in particular, have enjoyed healthy growth to find new support levels throughout the year and might be set to end on a strong note.
Frank Holmes, CEO of U.S. Global Advisors, believes this could traject the price of both gold and cryptocurrencies to hit new heights if things shape up well in the new year. In an buying Bitcoin, he noted:
“The number of wallets, people that are embracing bitcoin, that’s been growing for the past three years. Nice steady growth.”
Bitcoin price driven by supply and demand
Holmes continued to suggest that Bitcoin’s price surge comes from May’s halving event when Bitcoin mining rewards were sliced in half. With the demand increasing and the supply slowing down (a supply which is capped, like gold, to a limited amount and will eventually be mined up entirely). He offered:
“If tomorrow, if all the gold mines in the world said we’re going to cut supply by 50%, I can assure you gold will be at $10,000.”
Although the industry is speculative and volatile in its nature, Holmes noted that the “supply-demand function” will increase Bitcoin adoption as how much Bitcoin is mined daily drops coupled with new retail and institutional investors entering the market. If this rate of adoption and interest in cryptocurrency continues, 2021 will be a strong year for both commodities and cryptocurrencies, which would result in an impressive price surge and continued bull rally.