6 months after Bitcoin: This 700 million dollar crypto currency is about to be halved
700 million dollar crypto currency about to be halved
In May Bitcoin experienced its long awaited block reward: the number of coins minted per block was halved.
Many had therefore expected a massive increase as the market supply of BTCs was technically expected to decline in relation to demand.
And it did… somehow. Since the halving, Bitcoin has gained 70 to 80 percent against the US dollar, with the rising demand for the crypto currency driving its value up.
That’s why analysts are watching the first halving of Zcash very closely – the Profit Secret fork introduced by Zooko Wilcox that focuses on user privacy. Each block reward bisection or reduction has a decreasing effect on the crypto-currency market, so the first bisection is expected to be significant for Zcash.
Qiao Wang, a prominent cryptoanalyst and DeFi investor, explains
„Also a friendly reminder of the halving of the ZEC in one month. Unlike the 3rd halving of the BTC, which was completely exaggerated, the 1st ZEC halving is probably significant“.
The halving of ZCash is only days away
ZCash will now be halved in less than four days. Once the halving is activated, the rewards for the $700 million crypto currency for the Miners will be halved.
Theoretically this should lead to higher prices: A 50 percent decrease in block bonuses means that the Miners will have 50 percent less of the crypto currency available for sale every day. Assuming that demand for the ZEC continues, the price of the coin should rise over time, provided that there are no supply shocks.
However, according to Ryan Watkins, analyst at Messari, this could not be the case.
According to Watkins, the on-chain data suggests that there is reason to believe that the miners represent only a small part of the selling pressure that has dramatically brought down the ZEC in recent years:
„If we assume that the Miners sell their entire ZEC in the same way as they mine it, historically they have only represented less than 5% of the daily trading volume in the ZEC over the last year. The figure is not perfect, but it is good enough to show that the Miners may not be what is holding back the ZEC“.
The hope then is that Zcash’s first halving set to occur on November 18, 2020 could provide important relief in this respect.
However data indicates hope for this specific reason may not be rewarded.
In context, Altcoins is notorious for falling without capturing a bid after being traded higher than Bitcoin when it was introduced four years ago.
Nevertheless, many are convinced that the ZEC has a sustainable value proposition in the long term. The pseudonym DeFi and crypto investor „DgnTec“ recently wrote
„I am changing my mind about the ZEC. The need for a private SOV is even more evident in the case of DeFi, where whales are trading in the wild and are receptive to leaders and observers using virtual signalling“.
Ryan Selkis, CEO of Messari, joined this comment back in October. Selkis believes that the ZEC could potentially be a „Trojan Horse“ in this bull cycle, since „a clean opt-in/opt-out pool for data protection builds momentum with regulators, while at the same time introducing long-term fungibility (which is not possible with the BTC)“.