So what next? What will be the next talking point as the “priced in/not priced in” debate has now disappeared together with 50% of the block subsidy on the 11th of May?
According to industry experts, a number of key narratives and trends are likely to dominate BTC’s fate over the next 12 months.
From BTC’s increasing attractiveness as a safe-haven asset in times of economic crisis to growing regulation, all of these narratives could ultimately make BTC more mainstream and more accessible to a wider group of investors.
Decentralized Digital Gold Campaign.
The CEO of major crypto exchange OKEx Jay Hao, tells us that the ongoing Coronavirus outbreak may produce sell-off pressure on BTC in the short-term. However, he expects the narrative of BTC as ‘digital gold’ to grow in standing following the initial aftermath of the halving.
“However, the macro context looks bullish for BTC in the mid-to longer term,” he says.
“As people begin to question the value of ‘helicopter money’ and the effect that unchecked inflation of money supply has, BTC has just done the exact opposite… I think a big trend we will see this year is BTC further strengthening its status as ‘digital gold’.”
“Now, every time a major central bank will print money… the original BTC ethos is likely to gain new traction,” an expert tells us. “The original BTC narrative is likely to reemerge or be reinforced: BTC as a safe-haven asset ‘digital gold’.”
More Institutional Investors and More Derivatives.
“We will also see more institutional investors coming on board now that they see BTC as a hedge,” says Jay Hao. “We’re already seeing some very bullish signs for the market like famous macro investor Paul Tudor Jones adding BTC to his public fund portfolio as a hedge.”
Hao reminds us that investment banking giant JPMorgan has also recently opened accounts for crypto-exchanges Coinbase and Gemini.
In his view, this “will certainly open up the gates for more exchanges and more big banks globally.”
On top of this, Hao expects to see the “BTC derivatives market continue to grow and become exponentially bigger, perhaps even three or four times bigger than the spot in the next 12 months.”
However, not all experts believe that the current economic conditions are ready for steady growth in institutional investment. Also speaking to us, analyst Fawad Razaqzada believes there’s a risk BTC may correct itself in the coming months.
“Unemployment has skyrocketed across the globe and companies are filing for bankruptcies left, right and center,” he says.
“And while central banks and governments are doing all they can to address the supply side of the economy, demand from households and businesses could nonetheless remain soft for a long time which could undermine the economic recovery.”
Against this fundamental backdrop, Razaqzada suspects that BTC investors may take advantage of higher prices to book profit, while others may be put off by the volatile economic circumstances. As such, the narrative could be one of frustration potentially.
Another less prominent — and longer-term — narrative will relate to BTC scaling. As Ethereum (ETH) eventually transitions to the proof-of-stake (PoS) Ethereum 2.0, experts are expecting such developments to put extra pressure on BTC to develop its own scaling solutions, as well as more ecological mining methods.
Jay Hao says, “BTC has scalability issues, but there are many protocols being worked on such as the Lightning Network and Liquid sidechain. I think the challenges for BTC and other (proof-of-work) coins are to find more energy-efficient ways of mining with more sophisticated equipment, green energy, and cloud solutions moving forward.”
However, this might change in the long term, “as BTC is indeed facing foreseeable and inherent problems.”
Basically, Binance foresees that one longer-term narrative for BTC will relate to how it solves the problem of diminishing block rewards. While some experts believe that BTC will have to fundamentally reform itself to overcome this challenge, Binance believes that “non-custodial off-chain solutions, such as the Lightning Network, could avoid the necessity to choose between… compromises.”
Published at Mon, 01 Jun 2020 07:36:31 +0000