Traditional institutions in the United States are still promoting the further improvement of the Bitcoin financial infrastructure. The capital demand of traditional cryptocurrency investment institutions, individuals, and speculators still maintains a steady growth. The Bitcoin market may have good news in the first quarter of 2020.

Original title: Waiting for Bitcoin Spring and the Next Bull Market

Author: Yang Zhou, founder and CEO of PayPal Finance, expert in US Treasury bond trading, once worked in the Hong Kong Financial Services Department of PricewaterhouseCoopers

This article first appeared on the Bitcoin Magazine website, the original title is "Waiting for Bitcoin Spring and the Next Bull Market", URL:https://bitcoinmagazine.com/articles/op-ed-waiting-bitcoin-spring-next-bull-market

The Bitcoin market in 2019 was full of "black swan" events.

Facebook's release of the Libra project is one, and the high-level Chinese government's proposal to promote the development of blockchain technology is another. After the two "black swan" events, the price of Bitcoin was quickly pushed up to more than $10,000, which excited the market for a while.

However, as the progress of Libra has been hindered, and the recent negative suppression of virtual currencies in China's domestic media, the positive impact of the "black swan" incident has begun to fade rapidly, and the price of Bitcoin seems to have returned to the fundamentals. in the future.

Overall, the current Bitcoin market is in a stage of lack of enthusiasm, miners seem to be in a state of hesitation, and are not ready to make up their minds to make a big bet on new mining machines, and the traditional funds that have been placed on high expectations have not yet been large-scale Entering the market, only investors and speculators are dancing alone with the price fluctuations.

After April this year, miners benefited from the rise in the price of Bitcoin, enjoyed the dividends brought by super cheap electricity during the wet season, and spent a happy time. From the observation of PayPal Finance's own business, the loan demand of miners has dropped significantly after April, indicating that the income of miners is very considerable, and the motivation to borrow money has disappeared.

With the increase in computing power, we originally expected that in the second half of the year, miners would gradually phase out old machines and purchase new ones, which would bring about a large demand for funds. But a sharp price drop in mid-September brought miners to a sudden halt. Although the price of bitcoin soared shortly thereafter under the influence of China's policy, it left miners with lingering fears.

As a result, we have seen a large number of S9 machines being modified to reduce power consumption and continue to be used in mining operations, and their cost performance is similar to that of new machines. Even if some miners have paid a deposit for the purchase of futures mining machines, they seem to be in no hurry to place an order to put the mining machines into production. However, due to the decline in the price of Bitcoin, miners have begun to negotiate prices with mining machine manufacturers again.

At the same time, although some miners who have entered the market this year are in urgent need of funds, it is difficult for them to obtain loan support because they have not obtained enough bitcoins.

Under such circumstances, demand from investment and speculation has become the main driving force for the growth of lending platforms.

The demand for funds from traditional cryptocurrency investment institutions, individuals and speculators still maintains a steady growth, because most of them have the concept of holding bitcoins, so they would rather obtain funds by pledging bitcoins before investing or trading, I also don't want to sell the bitcoin in my hand easily.

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Source: Genesisi Capital third quarter report

As Christmas approaches, time is running out for Bitcoin this year, to paraphrase a Chinese buzzword. Will there be a sudden turn in the market? Not impossible either.

Canaan Technology, a Chinese mining machine manufacturer, successfully landed on Nasdaq in the United States, consolidating the confidence and optimism of Chinese market investors in Bitcoin.

In addition, after the opening of BAKKT, although the trading volume was disappointing, with the two new product derivatives contracts - options based on Bakkt Bitcoin monthly futures (commodity code: BTM) and Bitcoin monthly cash delivery futures (commodity code: BMC) - launched, and its option products will be launched soon, it can be seen that traditional institutions in the United States are still promoting the further improvement of Bitcoin financial infrastructure.

These moves may indicate a potential upside is brewing. Therefore, I expect that by the first quarter of next year, there will be good news for the Bitcoin market.

After all, winter has come, can spring be far behind?