Decred co-founder explains the logic behind Bitcoin’s low and high markets
Do Bitcoin’s market cycles depend on its structure as an asset, on human psychology or on both?
Cofundador da Decred explains the logic behind BitcoinNOTÍCIAS‘ low and high markets
Since its launch about 12 years ago, Bitcoin (BTC) has seen a series of high and low cycles, each bigger than the previous one. What drives these cycles? Decred co-founder Jake Yocom-Piatt says the answer lies in the human brain.
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„Bitcoin’s high and low cycles are functions of generic human psychology, periods of attention and its deterministic and decreasing emission,“ Yocom-Piatt told the Cointelegraph.
Over the years, several personalities have put forward different arguments for Bitcoin cycles, including creator of the stock-to-flow model, PlanB, which projects future Bitcoin prices based on halvings programmed every four years.
Bitcoin is different from any asset that existed before its creation. Its programmed finite supply and ease of movement allow the storage of values without borders.
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One might ask, however, whether the nature of Bitcoin as a programmed asset dictates its price cycles at some level, especially since its mining reward is cut in half every four years, decreasing Bitcoin production to the market each time a block is extracted. Its maximum supply limit of 21 million can also be considered in the equation.
„The Bitcoin supply rate is constantly decreasing as a percentage of total circulation, with the addition of a substantial supply shock to each halving,“ explained Yocom-Piatt.
„Bullish races occur when demand begins to outstrip supply, raising the price, which draws the attention of less attentive investors. After a while, the attention of these short-sighted investors to a bullish market diminishes and we return to a bearish market. With each bullish market, Bitcoin’s general awareness grows, sowing the seeds for the next bullish run. ”
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Bitcoin recently flirted with its 2017 high, nearly $20,000, receiving attention from mainstream media coverage.
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