TECH

Less bitcoins, higher value?

The new coronavirus pandemic has brought down markets around the world and one of investors ' concerns is about how long it will take for assets to recover to pre-crisis levels. In this exercise of futurology, some few financial investments have brought more optimistic prospects. Among them are gold and mainly cryptoactive. In the case of the latter, there is a great reason for optimism. On Monday 11 bitcoin went through a new halving, name given to the cut in half in the emissions of this cryptocurrency. The mechanism serves to raise the price in the future, on the principle that scarcity values the asset.
Presented to the world in October 2008, in the midst of the subprime crisis, bitcoin is a digital money with a function similar to paper money. The first transaction took place in January 2009. The difference is that it is not issued by any government but on a network of computers scattered around the world, called miners. At its creation it was established that there will be a maximum number of 21 million bitcoins issued by 2140 year. And in order for this to occur within the programmed time frame, there must be a halving every four years. By reducing supply by half, the inflationary process is avoided.
Until May 11, 12.5 bitcoins were issued every ten minutes. With last week's halving, the rate fell to 6.25. As demand for the asset has increased, it is believed that the law of supply and demand positively influences the price of the currency. ” The valuation should happen gradually, within 12 months, " says Ricardo Da Ros, executive in charge of operations in Brazil of the Argentine digital investment platform Ripio. "Those who think about the short term should be very careful.'Fitwel Champion
The first two halvings, in 2012 and 2016, brought good results to investors. The biggest difficulty now is the conjunction of volatility and lack of liquidity. The cryptocurrency market is historically more volatile until the stock exchanges. Bitcoin started 2020 near $ 7 thousand, reached$10 thousand in February, fell below $4 thousand in March and rose to $9 thousand in early May. Of course, the pandemic influences this variation. In the future, the fact that many investors will be less capitalized can also pressure the crypto price down. Proof is the disappointment of those who expected to see a surge in value after the third halving. As soon as the process was carried out, on Monday 11, bitcoin was quoted at $8,529, with a slight drop of 0.36% in the accumulated 24-hour. Daniel Coquieri, co-founder of BitcoinTrade platform recognizes that the pandemic has damaged the performance of cryptocurrency, since in times of crisis investors take the resources to have in hand dollars or Real in order to honor commitments of everyday life. He believes that unlike the traditional market, which is impacted by the shutdown of economies, cryptocurrencies have greater recovery potential for their independence. Since they are not issued by governments, nor are they tied to economic policy actions, they can operate free of public funding concerns. "When the market goes on to receive a smaller number of negative news, investors will return confidence in bitcoins”" says Coquieri. For him, the expected valuation with the last halving will occur in a period between six and 18 months. US$250 thousand the first halving made it possible to value the coin in 200 times. In the second, the increase was 4,000%. But this happened within three years after the process. It was neither immediate nor linear, with many ups and downs. In 2012, bitcoin went from a valuation of $3 to $1.2 thousand. In 2016, it had already fallen to$ 152, to then reach$ 19.3 thousand in December 2017, according to the halving dossier, a report issued by Ripio in early May. The expectation based on this track record is such that some analysts predicted that bitcoin will reach$ 250 thousand in a few months. Ricardo Da Ros, from Ripio, is a little more skeptical. In his analysis, the pattern has not been repeated this year, so much so that with a few days left for halving there was no indication of an asset value explosion similar to the previous ones. "My outlook is high valuation in a 12-month period and can not predict at what price level the cryptocurrency will reach.”
If the uncertainty about the future is high, the return has been even more. The performance of cryptocurrency has been shown to be better than those of many traditional assets. Analyzing the behavior during the year, until May 5, it brought a return of 68% when traded in real and 23% in dollar. In the same period, gold yielded 11%, the dollar, 38%, while the S&P 500, Ibovespa and the oil price index (WTI) showed negative results of 10%, 30% and 60%, respectively. 

Marcelo De Paula-Brazil