Investors expecting a sudden surge in bitcoin’s price, after it underwent a technical adjustment three weeks ago that reduced the rate at which new coins are generated, may have to wait a few months, or perhaps a few years.
On one end, we have network data and technicals; the other, strong fundamentals and a correlation to US stock indices
The virtual currency has gained 11% since the adjustment, but it had more down days than up days and analysts said technical momentum overall was negative.
Since miners’ profits have contracted as block rewards decreased by 50%, the “halving” has affected the supply side of bitcoin and increased the time needed for miners to find their break-even point.
“When we look at institutional inflows for our products and that of another asset manager, what you’re seeing are purchases that have now outstripped, for the first time, new bitcoins being created by 150%,” said Danny Masters, chairman of CoinShares, with $1-billion in crypto assets.
It just needs more time for mainstream adoption
Michael Sonnenshein, MD at Grayscale with $4-billion in crypto assets under management, said since April the firm’s bitcoin investment fund has ballooned to $3.5-billion as of 2 June, from $2-billion at the end of the first quarter.
