Bitcoin has been solid this year, caught between bullish and bearish rallies, but trading within a safe range. While it’s far from COVID-19 highs, it’s far from the lows when Bitcoin touched just above $16,000 per 1 BTC after the fallout. of the failure of the FTX cryptocurrency exchange.
Historically, halving is an occasion that drives up Bitcoin’s value. Halving is when miners’ accolades are halved, so fewer bitcoins are available. This occurs in scheduled periods based on the number of Bitcoin blocks mined. Bitcoin’s next halving will take place around April 24. 2024, when block number 840. 000. Es the living embodiment of Bitcoin’s credo that the value of a scarce asset will decrease as its supply is minimized.
Bitcoin’s programmed deflation is the opposite of the inflation that accompanies the accumulation of fiat cash supply, such as that of the U. S. dollar. For example, a year after the 2020 halving, Bitcoin’s value increased by as much as 533% at one point.
Will the same thing happen again? Or will this halving cycle be replaced by a cycle of bad news, such as China’s implementation of the proposed cryptocurrency mining ban that will reduce costs soon after in 2021? These are questions I have particularly addressed in my studies on China and Bitcoin.
Perhaps no country has affected the history of Bitcoin’s value as much as China, however, there are several reasons why China’s moves may be more unbiased in the market at least until the next halving.
China has cracked down on bitcoin mining through a decree of the State Council and banned the maximum bureaucracy of bitcoin trading on exchanges. The State Council is the highest administrative body of the Chinese state. The American formula and the Chinese formula are difficult to compare. However, one way to view the State Council is to see it as a “super-executive force”, reporting to the Prime Minister, who is second in the Chinese forces formula, the Secretary-General (currently Xi Jinping), and is sometimes thought of as the administrative head of the state, and responsible for regulating and advancing economic growth.
When the State Council speaks on an issue, the other branches of the Chinese government temporarily fall into line. Provinces such as Sichuan and Inner Mongolia, which in the past delayed and gave Bitcoin miners more time to gradually reduce their operations, followed stricter plans. end Bitcoin mining in the province as soon as the Council of State rules.
The vice prime minister who chaired the committee tasked with implementing the effective ban on Bitcoin mining, Liu He, has retired from the Politburo. Although he continues to consult informally on economic issues, it is unlikely that Bitcoin will return to a Politburo-level occasion as Xi’s state. and Liu He, whether in a war over investment systems and flows or “trade and economic issues” with the West.
Bitcoin is also identified as a virtual asset and a defensible virtual commodity through some Chinese courts; This has been the case in the Chinese courts formula for many years. China’s cryptocurrency regulations are known as the “Key Prohibition Rules” – it is illegal to act as a central counterparty for the exchange of cryptocurrencies as legal tender or between them, and it is illegal to increase the budget of ICOs.
Therefore, there is no large-scale bitcoin exchange based in China. There is also a strict ban on cryptocurrencies as legal tender or currency in circulation. However, the right of Chinese citizens to own bitcoins as a virtual commodity has been upheld through several courts.
The Chinese party-state is unlikely to go after other bitcoin holders who are Chinese citizens due to the combination of virtual asset protections and bans targeting the use of bitcoin as legal tender still implemented at the point of enforcement. than at the network point. This means that centralized companies, such as Bitcoin exchanges and miners, are in the crosshairs. But Americans who own Bitcoin, and perhaps run a Bitcoin node, are not yet.
As a result, China has yet to take every excessive measure imaginable to eliminate Bitcoin. Although those looking to mine Bitcoin deserve caution, as Bitcoin miners have been seized for their energy consumption, there have been no widespread seizures. of Bitcoin by Chinese citizens or a Great Firewall ban on protocol ports.
Although the Chinese state has made it difficult to buy bitcoins with yuan, using Tether and buying bitcoins with it remains an open secret for OTC exchanges. Disruption here will most likely come if more exchanges or a primary stablecoin fail than through Chinese state moves. China’s party-state would likely have to respond if this were the case; However, it will most likely take very few proactive measures at this time, as there are no announcements on the horizon (while the Chinese party-state had warned that it opposed Bitcoin mining). ). ban for years).
Recently, two “bullish” news has been known about Chinese Bitcoin.
The first is the resolution of the Shanghai court, which, a little more nuanced about the difference between Bitcoin and cryptocurrencies, follows more or less the same trend of the Chinese courts in detecting that Bitcoin and other virtual assets are assets and deserve protection against seizure under Chinese civil law. code.
In Hong Kong, there are signs that the need for capital inflows has led Hong Kong to embrace cryptocurrency exchanges. This is a way of promoting the concept that everything in Hong Kong remains the same after the protests, not easy for universal suffrage, paralyzed the city.
However, the first signs of difficulties are emerging with the bankruptcy of Hong Kong-based JPEX. JPEX is an unlicensed cryptocurrency exchange and has gone through the proposed new regulatory structure.
Still, this is probably an explanation for why Hong Kong’s executive branch is worried, which does not bode well for the licensing regime, which securities regulators and the central bank have necessarily pushed.
An underrated facet of how China can cost Bitcoin is the export of its ideology. China was one of the first states to attempt to crack down on Bitcoin, partly because of its sensitivity to capital controls in a closed formula and also because of the giant. Bitcoin mining activity within its borders.
The same arguments that proof-of-work bitcoin is a waste of energy are already appearing in some US states, such as New York State’s temporary ban on certain bitcoin mining activities and European legislation. Other states may soon follow these steps from China, which would have the effect of moving the value of Bitcoin, as those differences will be more recent than China is likely to do now.
Typically, a halving leads to an increase in Bitcoin’s value. However, this time it is more doubtful that this is the case. This will be the first halving for China since the Bitcoin mining ban went into effect.
While Chinese social media was lit up with each Bitcoin halved due to the sheer number of Bitcoin miners in China, it’s conceivable that 2024 will be a bit more boring. However, major political events in China are unlikely to influence Bitcoin prices until then. Demand for Bitcoin may increase as capital flight takes hold across the country.