CryptoCompare Analysis – Searches For “Bitcoin Halving” Hit Unprecedented Levels Date 07/05/2020
As Bitcoin has surged in price over the past two weeks, Google searches for “Bitcoin halving” have surged in tandem, dwarfing numbers from the previous halvings.The chart below shows just how much search interest has increased compared to the spike around the last halving in July 2016.
What’s more, searches for the term have even begun to approach the levels of searches for “cryptocurrency,” once a far more popular search term.The chart below shows how the two search terms stack up against the Bitcoin price over the last year
April 30th saw historic volumes ahead of the Bitcoin Halving Our April Exchange Review found that crypto spot markets saw another historic daily volume record, totalling $66.2bn on April 30th – as Bitcoin soared above $9,000.While this doesn’t match the daily volumes seen on March 13th ($75.9bn), it still represents the second highest volumes on record .
The majority of this figure came from Lower Tier exchanges ($48.3bn), with volume from Top Tier exchanges totalling $17.9bn.This figure once again represents one of the highest volume trading days in cryptoasset history for Top Tier exchanges.
Options market still cautious
The Bitcoin options market offers some insights as to how the most sophisticated market participants are approaching this historic event.If we look at options contracts on Deribit, we can see the differences between the implied volatility skews over the last few weeks.
The rally in the bitcoin price last week moved the At the Money (ATM) level to higher strike prices.This, coupled with an increase in uncertainties post halving, means that we have seen some lifting in near-term expiries’ implied volatility, with longer term expiries implied volatility subdued.
For expiries in May, we saw an increase in implied volatility in Out of the Money (OTM) puts and somewhat of a decrease in OTM calls.This may be due to bitcoin holders trying to hedge potential downside movements after the halving while taking advantage of the increased bullish sentiment in the underlying bitcoin price.
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Does this mean we will see price surges similar to previous halvings?
In 2016 and 2012, bitcoin saw a substantial increase in price in the six months following the halving events.
While in theory a decreasing rate of supply and increased retail interest suggest surges in price following the halving, the reality is a lot more complicated.
In 2020 we have a much broader array of market participants, larger market players, more established exchanges and a far more developed derivatives market.
This likely means that the change in supply – and impacts from miners selling their bitcoins – are less felt.Furthermore, the impacts of Covid-19, central bank interventions and equity market volatility on the Bitcoin price could be bigger determinants of price movement than the halving itself.The world’s eyes are on Bitcoin, however, as it exhibits its most impressive trait at a time when trillions of dollars of fiat currency flood into the global economy.If there was ever a coming of age moment for Bitcoin, this is it.
What is the Bitcoin Halving?
“halving.” When the pseudonymous creator of Bitcoin, Satoshi Nakomoto, constructed the Bitcoin network and protocol, he or she (or they) pre-programmed it to include an ever-decreasing rate of new Bitcoins being supplied, with the total amount capped at 21 million bitcoins.
Bitcoin relies on “miners” to maintain and secure the network, who process blocks and add them to the shared record of all transactions (the “distributed ledger”) which form the blockchain.As a reward for this energy-intensive task, miners are compensated with bitcoins.
Every 4 years, this reward for adding a new block is cut in half.The last time this happened, in July 2016, the Bitcoin block reward was slashed from 25 to 12.5 bitcoins, and the same is due to happen this May (estimated to be on May 12), with miners set to receive only 6.25 bitcoins from then onwards..
