The recent trend downward is being blamed by traders on numerous factors. Lately, it's chique to point to news articles that are promoting Fear Uncertainty and Doubt (FUD) and blame that for the negative market sentiment.

It's difficult to say how Bitcoin markets respond to news. During the turmoil in Cyprus and the Greek economic crisis, bitcoin was incredibly volatile. When a correlation this strong is observed, it's hard to discount it. But often times good news leads to price declines, or bad news leads to price increases, or the market just doesn't respond at all to news.

Bitcoin's controlled supply feature where the number of bitcoins that can be mined is capped has a gradual timeline. However, a major milestone in this timeline is coming up in the summer of 2016: the bitcoin block reward halving, or simply The Halvening.

The Bitcoin Block Reward Halving Countdown site provides a useful countdown to when the reward for each block that is mined every 10 minutes goes from 25 bitcoins to 12.5 bitcoins. This occurs every 210,000 blocks, which means the halvening after that will come in another 4 years, summer of 2020. 

So this is not an event that should be taken lightly. This is a World Cup, something we only see every four years and is very special. In fact, it's so special it is unprecedented. We do not even know what the effect could be on market prices of bitcoin. Will BTC/USD break all-time-highs (ATHs) due to the reduction in supply increases as a result of the reward falling? It's hard to tell.

Miners are the obvious first losers in the reward change. They will not be able to earn as much from their activities, and thus some will drop out, the difficulty will drop, and the remaining miners will demand a higher fee. Thus, we could all be paying a bit more than the standard 0.0001 btc that is used today. At $320 for BTC/USD the current transaction fees are still dust, but if price increases and the amount needed to get timely confirmation increases, it could squeeze people who are at the margin.

But is it that simple? Will price increase just because supply increases from mining will be smaller? Or will the change have some unforeseen consequences for price?

The economics of the bitcoin ecosystem will not likely be affected in any adverse ways. For one, this block reward halving has been baked into the protocol, people have known this and it's been well-built into market participants' expectations. That said, there will be media attention surrounding the event, surely. And this could generate more hype. Together with more exciting bitcoin projects and startups releasing services in 2016 could make for a bullish cocktail going forward.

The precise date of the bitcoin block reward halving is not possible to determine, but the current estimated day is July 24, 2016. Technically this is the second halving, the last one was in October 2012, which was also the "first" halvening. As there will be more halvenings roughly every four years. Visit the halving countdown clock to get the most updated estimate.

Traders of all sort know that the most important characteristic in the game is integrity. Bitcoin traders would not be confident making trades if they thought their counterparty would flake on them on a whim, or if their profits would just be reversed later arbitrarily.

Well this is what happened this week, when Gemini had a customer who market-bought the orderbook up to $2200 on BTC/USD. Shockingly and unprecedentedly, Gemini chose to reverse the trades which were purely user-error, or "fat-finger" in industry terms.

This is a grave mistake by Gemini management. Why would anyone want to provide liquidity to thicken their orderbook, when there is now a high risk of them being reversed if they are filled? This kind of policy of reversal in the event of user error serves nobody's interest but the single customer who made that mistake. It harms all the counterparties to that customer's market-buy while damaging the reputation and the expectations that bitcoin traders will have now on Gemini. 

An exchange is worth nothing if it doesn't have liquidity and volume, and Gemini has struggled heavily with both. By not forcing its customers to honor their trades executed from their platform when the case involves purely the trader's error, they are incentivizing future complaints in volatile market conditions and undermining liquidity provision.

Gemini, you said you wanted to attract institutional investors, serious traders. Well, we are big boys. Forcing us to honor our trade commitment is central to holding together the integrity of the market and facilitating trust in exchanges. Your decision to reverse trades that were legitimately executed will live to haunt you in the Bitcoin exchange space.