Bitcoin’s (BTC) hash power just crossed 65 EH/s to break its previous high for network hash power. Unspent transaction outputs (UTXO) have also been steadily rising, along with mining revenue on BTC higher than ever, and the bull cycle is only just starting.
In this article, BTCManager explores the growing fundamentals and the imminent explosion of the pioneer cryptocurrency
Lining up the Dots
There are so many different aspects that build up BTC’s investment thesis for the upcoming year. With the halving less than 12 months away and fundamentals bursting through the roof with adoption and development, the perfect storm appears to be brewing for the crypto market as a whole.
BTC’s halving brings along a set of economic phenomena that aid its investment thesis. Although the mining difficulty algorithm is set to become much more robust, despite just hitting its ATH, the most crucial aspect of the halving is the reduction in block reward from 12.5 BTC to 6.25 BTC.
The key proposition behind bitcoin as a store of value is protection from censorship and scarcity. By lowering block rewards, incoming supply to the market is cut in half, and its deflationary property kicks in.
Anthony Pompliano, a managing partner at Morgan Creek Digital, believes that Bitcoin will induce a case of global prisoner’s dilemma, forcing central banks to take quick action.
His theory follows that once central banks realize Bitcoin cannot be shut down or stopped, they will have no choice but to accept its existence and begin adding it to their currency reserves, similar to what BTCManager highlighted previously.
Central banks and monetary authorities across the globe believe inflation gives producers incentives to continue manufacturing, and deflation is a negative phenomenon that reduces the supply of goods and services due to consumers deferring their spending. In reality, consumers buy and use what they require and try to save as much as they can anyway.
Geopolitics as a Driving Force
Global tensions are on the rise, including USA’s standoff with China and attempts to strong-arm Iran into conceding to their will. If there’s one thing markets hate, it’s uncertainty.
In this case, uncertainty has been on the rise for the last year and is aided by region-specific geopolitical tensions such as Brexit and North Korea’s refusal to abide by fair policies.
Bitcoin cannot be stopped by a government, company, or individual. It is pervasive and will continue to exist no matter what anyone thinks or does. For this reason, it is only a matter a time before the utility of such censorship resistance is made crystal clear to the masses; and once the masses start to realize the true potential of Bitcoin, there is nothing any government can do stop people from holding it.
It is thus in their best interest to put forth reasonable regulations to eradicate criminal activity without harming their own interests. The investment thesis for BTC has never been this strong – and it will only continue growing.
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