Despite a post-halving increase in the price of bitcoin on Wednesday, the current value may not be enough to keep less efficient miners operating and that could change market dynamics.
At press time, bitcoin (BTC) was trading 2.3% higher in the 24-hour period at $ 9,106. The world’s first cryptocurrency is trading above its 10 and 50 day moving averages, which is a bullish technical indicator, and has been on a steady uptrend since the beginning of May 13, 00:00 UTC.
The long-awaited halving has been “somewhat uneventful,” said Jack Tan, founding partner of Taiwan-based cryptocurrency firm Kronos Research. But there was a bright spot for traders: Bitcoin prices have risen slowly but surely.
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But market uncertainty persists when it comes to cryptocurrency miners. The reward for miners for generating new bitcoin has been cut due to the halving to 6.25 BTC, so the business of running machines to protect the network is much less profitable: “I think some of the miners may be in trouble. They suffered a 50% pay cut overnight, with prices staying where they are, ”Tan added.
According to data provider Glassnode, one mining metric that changed immediately after the halving was commission revenue, which jumped from 4.6% just before the halving to 7% on Wednesday.
Miners leaving the business could change the dynamics of the cryptocurrency market, said Alexander Blum, of Two Prime, a crypto asset management company. “The difference is that new miners’ net tokens are now not necessarily the main driving force behind selling pressure in the markets,” he said. “That mantle is likely to be taken over by exchanges that charge trading fees and have to sell on the market to cover their business expenses.”
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The steady trading volumes are indicative of the market’s health and whether bitcoin can continue to appreciate after the halving, said David Lifchitz, chief investment officer at quantitative cryptocurrency trading firm ExoAlpha.
“Increasing the scarcity of an asset tends to make it more valuable over time, but only if there is still demand,” Lifchitz said. Bitcoin’s price appreciation appears to be increasing in a world where bitcoin has been performing better than some traditional assets since the beginning of the year, Lifchitz added, and the numbers confirm this.
Bitcoin is beating the S&P 500 index on Wednesday, with the large cap stock index down 1.75%. Cryptocurrency is also doing better than gold, which is up by less than 1%. For the current year, bitcoin is up 27%, gold is in the green by 13% while the S&P 500 is down 12%.
On Wednesday, the digital assets on the large CoinDesk board are flashing green. The second largest cryptocurrency by market capitalization, ether (ETH), gained 5.4% in 24 hours at 20:00 UTC (16:00 ET).
Other cryptocurrency winners include lisk (LSK) up 7.5%, monero (XMR) up 6.7%, and iota (IOTA) up 3%. All price changes occurred Wednesday at 8pm UTC (4pm ET).
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In commodity markets, oil is trading steadily, up by less than one percent following continued cuts in crude oil production. “Other oil producing countries in the Middle East have stated that they will also reduce production. Kuwait will reduce production by an additional 80,000 barrels per day while the [United Arab Emirates] it will reduce production by another 100,000 barrels / day in June, “said Nemo Qin, senior analyst for eToro multi-asset brokerage.
US Treasuries all slipped as yields, which move in the opposite direction of price, fell more on the two-year bond, down 6%.
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The FTSE Eurotop 100 index of Europe’s largest publicly traded companies closed trading down 1.8%. The Nikkei 225 of the largest Japanese companies ended its day in Tokyo down by less than one percent due to poor performance by the large transportation and materials companies which dragged the shares lower.