The hype is growing through the broad crypto community as the upcoming halving of the Bitcoin mining reward approaches.
Given the severe economic downturn triggered by the current global coronavirus pandemic, Bitcoin’s value was in conflict with traditional stock markets. A driving force behind this trend is the halving, which is expected to take place on May 12th.
Halving is eagerly awaited Bitcoin’s reward for validating a block is halved. This is a basic deflationary function developed by Bitcoin creator Satoshi Nakamoto. There have been two halves since the main cryptocurrency launched on the market in 2009. The block reward is halved after mining 210,000 blocks, which takes approximately four years. The previous two halves have led to significant price increasesThe first of these brought the price of BTC from $ 11 to $ 1,000 in one year. The year before the second halving, the price of Bitcoin rose steadily.
Bitcoin’s price movement has been scrutinized by industry experts, traders, and enthusiasts alike, and there are very different predictions about possible movements in the coming weeks and months.
Bulls, bears and everything in between
The American investor Anthony “Pomp” Pompliano has pointed out the upcoming halving in several recent letters to his subscribers. The one on April 29 showed an optimistic stance on the halving and potential bitcoin value growth after the event:
“”This one [halving] You will notice a planned decrease in daily Bitcoin supply from 1,800 per day to just 900 Bitcoin per day. This supply shock has led to price increases in the past 18 to 24 months“”
An important consideration for Pompliano is the fiscal incentive that the Federal Reserve brings to the American economy. The American investor classified Bitcoin as an inflation hedge and seemed confident that the event would be optimistic for BTC:
“”I believe that the halving of Bitcoin, which runs at the same time that the Federal Reserve (and other central banks around the world) are feeding billions into the financial system, will serve as rocket fuel for Bitcoin.“”
Pantera Capital’s founder and CEO, Dan Morehead, issued an equally optimistic forecast in a letter to investors at the end of April, which included a high price target in the twelve months after the next halving: “If history repeats itself, Bitcoin would peak at $ 533,431 in August 2021. “He added:”I’m just saying that there is more than a 50:50 chance that Bitcoin will go up – and go big.. “
Cryptocurrency investment analytics firm CoinShares also offered a number of halving perspectives in its latest report, written by chief research officer Christopher Bendiksen. The proposed report cIt contained various scenarios that could take place during and after halving the Bitcoin mining reward and provided an indicator of the likelihood of each scenario.. According to the report A death spiral is extremely unlikely to occur in the Bitcoin mining chain, while the likelihood that the value of BTC will not really impact is also unlikely.
Bendiksen suggests that two of the most negative scenarios are likely. First, due to the hype and mood of the halving event, traders may tend to buy and sell. Second, miners could be pressured to sell their Bitcoin holdings, which would lower the price of the cryptocurrency.
The report offers its own forecast, which suggests a positive impact on supply, as smaller mining companies may not be able to update their equipment with the latest advances. This could reduce the sales pressure on the miners to cover the costs due to the reduced supply for halving, as well as a possible loss of the miners due to profitability problems:
“Pairing a 50% reduction in the new offer available with a reduction in the proportion of the offer still available for sale on the market pIt hates to drastically reduce the ongoing sales pressure from miners. This dynamic in combination with the macro-economic elements of the world governmentsand the existing and growing inflows into the passive Bitcoin investment products that we are currently observing could trigger a perfect storm for the Bitcoin price in the medium and long term. “
The co-founder and current project manager Decred Jake Yocom-Piatt added some fuel to the discussion in a correspondence with Cointelegraph. Their main point was that miners would be forced to increase Bitcoin’s selling price after halving since the price of mining will not change. What Yocom-Piatt called the “supply shock” could potentially lead to a huge increase in Bitcoin value.::
“In the short term, I expect the price to roughly double, but It is difficult to make long-term predictions in the context of the boom and bust pattern in the cryptocurrency markets. The share flow rate increases significantly due to the halving, which is good for the price of Bitcoin in the long run. “
While there seems to be a trend towards positive price predictions from industry experts and the entire crypto community, there have been some critics who predict a negative outcome.
American investor, politician and economist Peter Schiff is known this week as a great champion of gold presents a very pessimistic perspective on Twitter. S.chiff suggested that most cryptocurrency traders expecting a big surge might be disappointed::
“A consensus trade is crowded and generally does not go as people expect. I can’t think of # Bitcoin consensus trade other than halving, an event that is widely believed to be extremely bullish.”
While the various predictions have offered a number of possible results, there seems to be an atmosphere of the unknown with halving. The predictions may tend to be bullish and bullish for Bitcoin, but many seem to be waiting with shaky breath for what will happen on May 12th.