What impact will the halving effect of Bitcoin and the pledge effect of ETH2.0 have on the market?

Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.

Blue Fox Notes (ID: lanhubiji)Encryption cycle and value flow》、《Blue Fox Notes (ID: lanhubiji)》、《In the summer of 2020, DeFi initially demonstrated its manic energy. In the next 6 to 12 months, the power displayed by Bitcoin and ETH2.0 may far exceed the magnitude of DeFi. Blue Fox Notes has also released many topics in this area before: "》、《ETH 2.0: Hearing the wind and moving》、《ETH 2.0: Hearing the wind and moving》、《Top 10 Signs ETH is Heading Up》、《Seven Reasons ETH 2.0 Will Create an Economic Shift》。

Why is ETH silent in the DeFi carnival?

Top 10 Signs ETH is Heading Up

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When Bitcoin halved in May this year, everyone was very excited. But Bitcoin's halving is not an instant effect. Bitcoin's halving will gradually show itself over time. The reason is simple. With the halving of block rewards, the supply of bitcoins is getting less and less while the demand for bitcoins has not decreased (and may even increase). There will be no obvious impact at the time of halving, but after a few months to a year, the effect of halving will gradually become apparent.

The picture below is from MoonCapital, which vividly shows the halving effect of Bitcoin, and only time will allow it to ferment.

If we look at pure price dynamics, Bitcoin in history has shown us the following state, what will happen in the future? No one knows, but we can look at the evolution of history. If it still meets this time, then Bitcoin will enter the stage of self-prophecy in the future. Because, it will only lead to more and more "strong hands" (hoarders).

(Bitcoin forecast for the time relationship between nadirs, halvings, and tops, Soure: NunyaBizniz)

Interestingly, the current BTC on Ethereum is close to 2 billion US dollars, and the locked volume is close to 150,000, and with the development of Ethereum DeFi, the trend continues.

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The Power of ETH2.0

From the perspective of ETH supply and demand, the influence of ETH2.0 is undoubtedly the largest in the history of Ethereum. It will exceed the impact on ETH in the previous ICO and DeFi period.

First of all, the PoS pledge mechanism creates a huge demand for ETH. Currently, about 8% of ETH is pledged on DeFi, and there are still about 2% on the gray scale. In the future, the ETH pledge amount of ETH2.0 is expected to reach about 30%. This would result in a significant reduction in ETH in circulation.

And we also need to consider a situation that about 60% of ETH has been lying in the wallet and has not been moved for a year. This means that for a period of time, the actual circulation of ETH will drop substantially.Value Capture of Ethereum EIP-1559 and ETH》。

Second, Ethereum’s EIP-1559 can capture value. The core of EIP-1559 is to destroy the basic fee of the transaction. At present, the transaction fee of Ethereum has surpassed BTC to become the largest value capture place in the encryption field. As of the writing of Blue Fox Notes, its annualized income fee income can reach 760 million US dollars, which is about twice that of Bitcoin or Uniswap. .

For the EIP-1559 proposal, please refer to the previous article "

Value Capture of Ethereum EIP-1559 and ETH

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Even if the capture of base fees is lower than the total fee captured by the current bidding model, if the transaction size of Ethereum continues to grow, then ETH can capture more base fees. If the scale reaches a certain level, it may even cause the deflation of Ethereum (realistically, it is unlikely in the short term, but this possibility cannot be ruled out). Once ETH enters deflation, this will lead to a cycle that will further promote the reduction of ETH circulation.

Before, people regarded BTC as digital gold, and its value storage position was unshakable. But if ETH enters a state of deflation, ETH may also compete with BTC in the value storage position.

In terms of value settlement, Ethereum has become the first public chain with an annual transaction volume of more than one trillion U.S. dollars, surpassing BTC. Ethereum overtakes Bitcoin as the largest crypto settlement layer. As shown below:

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(Ethereum surpasses Bitcoin to become the largest settlement layer, Soure: MESSARI)

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