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Opinion split as Bitcoin halving looms

Paul Tudor Jones - “Digitization of the world clearly benefits Bitcoin”

With the 0'>Bitcoin (BTC) halving only hours away, opinion is still split as to the significance of the event. Some have pointed to the gains which the leading crypto experienced after the two previous reductions in mining rewards, while others have argued that the halving has essentially been priced in.

Bitcoin has recovered from the 52-week low of $3,925 it witnessed in the middle of March’s Covid-19 market sell-off and briefly broke $10,000 on Friday evening.

Most investors and crypto enthusiasts attributed the breaking of this important benchmark to the upcoming halving, an algorithmic event through which the reward from mining new blocks of the Bitcoin blockchain reduces by 50 percent.

A ten per cent plunge in the space of an hour on Saturday morning dented this narrative and, while BTC stands up around 3 per cent at $8867 by late-afternoon Monday trading, uncertainty still remains as to the importance of the event.

Bitcoin sceptic and author of The Case for People’s Quantitative Easing, Frances Coppola, has described the halving as a “total non-event,” observing: “It's equivalent to the Fed finally cutting the rate of QE asset purchases after signalling it for months on end, and much less important.”

Michael Sonnenshein, the managing director of Grayscale Investments, has also doubted whether BTC will witness any dramatic changes immediately following the event, stating:

“The factors surrounding bitcoin today are very different from the past two Halvings, based on the maturity and evolution of the ecosystem in the last four years. Institutional investment, regulatory clarity, futures contracts—there’s so much that has developed and solidified around the ecosystem between these events.”

The MD of the largest crypto asset manager in the world did admit however, that nothing would surprise him.

With livestreams and predictions aplenty, the crypto community clearly believes that the halving is an important event.

This community has been buoyed in recent days by Paul Tudor Jones. The veteran hedge fund manager and multi-billionaire told CNBC on Monday morning, that between 1-2 per cent of his assets are in Bitcoin and noted: “The digitization of the world clearly benefits Bitcoin.”

Recognising central bank determination to depreciate the value of currencies over time, Tudor Jones described fiat currency as a “wasting asset” and Bitcoin as a possible hedge against inflationary policies.

While support from such a prominent and respected voice is obviously a boon to believers in Bitcoin, it should also be noted that Tudor Jones referred to the crypto as a “great speculation” and stated: “It has not stood the test of time, for instance, the way that gold has, which has been a store of value for 2,500 years.”

Tudor’s observations nonetheless demonstrate the increasing attention paid by leading financial institutions and figures to the world’s most popular cryptocurrency. Only last month, it emerged that Jim Simons’ legendary Renaissance Technologies Medallion fund had obtained permission to enter into Bitcoin futures transactions.

Although opinion may be split as to the importance of the halving, this growing institutional interest points to a strong future for Bitcoin.

FURTHER READING: Hyperinflation drives Bitcoin adoption in Iran

FURTHER READING: Institutional investors increase crypto exposure amid Covid-19 crisis

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