The potential approval of a spot Bitcoin exchange-traded fund (ETF), the upcoming BTC mining rewards halving, and major regulatory and enforcement actions will have a profound psychological impact on market prices.
This was a key takeaway from the Next Block Expo conference in Berlin, where Bitcoin surpassed $42,000 for the first time in more than a year.
Animoca Brands CEO Robby Yung, gumi Cryptos Capital Managing Partner Miko Matsumura, Binance Regional Manager Jonas Jünger, and Polkastarter Head of Business Development João Leite weighed in on whether the current cryptocurrency bear market is coming to an end in a conversation with Cointelegraph.
Bitcoin halving is a psychological phenomenon
Matsumura considered the impact of the four-year cycle between Bitcoin (BTC) mining reward halvings, likening its rhythm to that of a medieval battering ram.
“Every four years we swing the ram and crush it. Four years is long enough for people in the castle to think we’re gone,” explains the venture capitalist.
Related: Animoca’s Yat Siu Is Optimistic About TON Partnership As Bitcoin Lays Strong Foundation for 2024
Matsumura says half-life is embedded with the Schelling focus mechanism, a game theory concept and social phenomenon that allows people or organizations to coordinate without communication.
“It’s important to think of this as a psychological training phenomenon because whenever this works, people tend to follow suit the next time it happens.”
He also suggests that Bitcoin’s stock flow model clearly shows that the actual decline in BTC supply is getting smaller with each halving, meaning “the actual mathematical economic effect is smaller.”
Jünger echoes this sentiment by emphasizing the deflationary mechanism of the Bitcoin protocol and never discussing halving the fiat money supply.
“It’s such a foreign concept to everything that fiat is, so every time it happens, it’s just a celebration that we’re doing something completely different here.”
Yung said that while Animoca Brands has only two projects operating directly in the Bitcoin ecosystem out of its roughly 500 investments, the outstanding blockchain is still “very influential” in its role, another It provides an interesting perspective.
The Animoca CEO says this effect is similar to any business where interest rates, employment figures and other big macroeconomic signals affect it, even if they don’t directly affect it.
“So for us, we think Bitcoin is a central bank. With that in mind, we think of Ethereum as our investment bank.”
Years passed and we finally met @mikojava When we got a chance to do a panel today IRL @nextblockexpo In Berlin. TL;DR? We’re coming out of a bear market, and the honey badgers are gaining weight (just ask Miko). pic.twitter.com/h0PslG3DK9
— Robbie Young ⦿⦿⦿ (@viewfromhk) December 5, 2023
Bitcoin ETF and Consumer Protection
The pending approval of several spot Bitcoin ETFs in the United States is widely cited as an important driver of BTC’s recent rise in value to the mid-$40,000s. Yung provides a very short explanation as to why this is.
“The potential income of the Bitcoin ETF is estimated at $10 billion to $12 billion.”
For exchanges like Binance, the potential for immediate price spikes is another important consideration that can test the systems of many global exchange operators.
“These types of events are very important to running an exchange. When the news comes out and we see green wicks, it is a matter of success or failure in terms of providing basic infrastructure,” explains Jünger.
Related: Binance is now ‘completely different’: Interview with CEO Richard Teng
Binance’s regional director added that offering spot Bitcoin ETFs would fundamentally change consumer protection. This provides a compelling proposition to drive investment in the asset class.
“Suddenly with this ETF vehicle you can no longer hold a synthetic financial instrument that reflects the price of Bitcoin. There are actual seats. Everyone is safe. “They are all in prison.”
a cautious approach
While there is euphoria and talk of the cryptocurrency winter starting to thaw, Leite offers a sobering perspective when considering Polkastarter’s role in incubating and guiding cryptocurrency startups through two difficult years.
“During the bull market euphoria, many companies overspended. They did not create a treasury. This is very important,” explains Leite. Those who survive are looking forward to better times, but he advocates a cautious approach.
“Our advice is not to keep in mind that everyone is still excited. You have to have long-term intelligence. Make sure you have a few years of runway.”
The recent enforcement actions against Binance and its $4.3 billion settlement with the US Department of Justice have been described as positive developments for the industry as a whole, allaying fears about the future operations of the world’s largest exchange by trading volume.
Magazine: The Truth Behind Cuba’s Bitcoin Revolution: Report from the Field