This week on Planet Bitcoin - 15 July 2016

Friday 15 July 2016

TL;DR calmer than we thought

Well, it’s almost a week after the Halving, and the Apocalypse hasn’t happened yet. There has been some fluctuation in bitcoin’s price but, given this is bitcoin, it’s really nothing to write home about.

Chart

As is clear from the chart, a significant drop in value did occur two days prior to the Halving, with bitcoin falling from the $670s down to the low $600s. This spike downwards, though it may have been caused by pre-halving nerves and profit-taking, was short-lived. The price quickly recovered back to the $640-670 range, where it has spent significant time in recent weeks. The hours around the halving of block rewards also showed some volatility, but in the grand scheme of things there was little of note. Since that time volumes have been rather lower as traders digest the reality of what the wider market concluded of the financial importance of the Halving - essentially a shrug.

The question of fair value will now be increasingly affected by the fundamentals of available supply, which is necessarily reduced, and the medium-term impacts on miners of reduced rewards - along with any implications for security and block times. The coming weeks are also the point at which Segregated Witness will start to be adopted by miners, potentially easing the squeeze on new blocks as capacity reaches its limit.

Around the bitworld

Elsewhere in cryptoland, Ethereum and The DAO have had another tough week. A hardfork for Ethereum to reclaim the funds stolen from The DAO is now practically a certainty, after almost unanimous support from Ethereum’s miners. Whether this will prove a necessary evil or a fatal compromise will only be known with hindsight, but the level of consensus suggests it will not be catastrophic. Meanwhile NXT’s stellar rise continued and then paused, as the period for balance snapshots began on 14 July to determine ownership of the new 2.0 network token, named Ardor. As with the bitcoin halving, it's likely that NXT will prove volatile in the coming weeks. As things stand, its trading volumes have been second only to Ethereum's in the last week.

In the broader markets, Sterling and the markets received a boost from Theresa May’s appointment as the UK’s new Prime Minister. GBP rose further to $1.33 after the Bank of England opted to hold off on any interest rate cuts until more economic data was available. It is highly likely that a cut to 0.25% and/or further QE will be decided at the next meeting of the Monetary Policy Committee in three weeks’ time.

 


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