Bitcoin Halving 2020 Prediction – How will Halving affect Bitcoin’s price?

Bitcoin Halving 2020 Prediction: There are less than 100 days left for halving. The market is eager to know how this event will affect BTC’s price.

On May 12, 2020, the validated transactions reward value per block will fall from 12.5 to 6.25 Bitcoins. This indicates that new BTCs will be even scarcer.

After the last two halvings, the market reacted with strong increases a few months later. There are high expectations that this pattern will repeat in 2020. However, there are analysts who disagree.

In this article, the Cripto InterCambio blog will explain what halving is. We will also present Bitcoin halving 2020 predictions.

What is halving?

Satoshi Nakamoto – the mysterious creator of Bitcoin – attributed several characteristics to his cryptocurrency. They made it a unique element in the history of money. BTC is a decentralized, anonymous and cheap money transfer system that does not need a third party to mediate any transactions.

But beyond those characteristics, Nakamoto had the brilliant idea of making it deflationary. As is well known, new Bitcoins are generated when transaction blocks are validated, a process known as mining. Halving happens every 210,000 validated blocks, then the amount of BTCs generated is reduced by half. This is a way to avoid inflation, so the money is not devalued.

Periodically, this feature causes a shock in Bitcoin offers. That is to say: coins become increasingly rare. The tendency is a price increase in the months following halving, as this process is accompanied by an increase in demand.

That is exactly what happened in the last two Bitcoin halvings. This is the data:

 First Halving (11/26/2012):

  • Reward: 50 to 25 BTCs per validated block;
  • BTC price on that date: approximately $12 USD
  • BTC price 12 months later: approximately $1,020 USD

Second Halving (07/09/2016):

  • Reward: 25 to 12.5 BTCs per validated block;
  • BTC price on that date: approximately $650 USD per unit
  • BTC price 12 months later: approximately $19,500 USD

As a result, there are huge expectations in the crypto world for a new price increase in 2020. As we will see, there are those who believe the price can reach new historical highs. However, some important analysts are skeptical about a new bull run. We will present both positions.

Bitcoin Halving 2020 Prediction – Halving will NOT affect Bitcoin’s price in 2020

Most skeptics argue that due to a matured market, this year’s halving will be different from past events. Another common argument is that appreciation could have already occurred during 2019.

Meltem Demirors,  from CoinShares, is one of the skeptics. According to this analyst, the current market offers more complex options for investment in Bitcoin than simply buying and selling it. The derivatives market has grown with options, futures, swaps, etc.

Most of the big investors tend to invest in the derivatives market. This would disconnect the cryptocurrency price of supply and demand.

Another argument is that the market may have absorbed the halving price in 2019. This was argued by Jihan Wu, co-founder and former CEO of the Bitmain exchange. According to him, in the first two halvings, the actors did not know what to expect from the market after the event.  That would explain the price hike.

In this context of market consolidation and expectations about halving, the main market players would have positioned themselves in advance. That is why BTC prices rose in 2019. It jumped from about $3,000 to $12,000 USD, closing the year around $8,000 USD per coin.

Bitcoin Halving 2020 Prediction – Halving will affect Bitcoin’s price in 2020

January 2020 Bitcoin’s price increase makes it difficult to predict if the price of halving already occurred. Right now, a coin is worth around $9,700 USD, which represents over a 30% increase in just one month. Keep in mind that there was a price increase in the period just before the last two halvings.

Noelle Acheson, research director at CoinDesk, argues the importance of the halving narrative in market players’ decisions. As most investors expect spectacular gains in the months following the event, this fuels price increases which, in turn, feeds the narrative.

Halving from the perspective of two traders: 

Bitcoin at $55,000 USD

PlanB analyst stirred the crypto world by using a Stock to Flow (S2F) model to predict a sharp rise after the event. This model is used to predict the price of gold and silver, and it correlates a shortage of goods with their price. The trader argues that a shortage itself generates value, and this would also be valid for crypto.

In this model, halving means an increase in scarcity. Therefore, an increase in price. PlanB estimates $55,000 USD after halving.

Bitcoin at $14,000 USD

Timothy Peterson, an analyst who specializes in the crypto market, has more modest predictions. On his twitter, he conducted a survey about user expectations regarding halving. The poll was this:

  • “I am saving fiat/altcoins money to invest in Bitcoins later in the year.” Result: about 20% of users.
  • “I have already invested what I can in Bitcoin, and I am waiting for halving”. Result: about 80%.

From this small sample, Peterson extends the analysis to the entire cryptocurrency market. With a 5% margin of error, the analyst believes that the impact of people who are “waiting to buy” could be up to +60% on the current price. Therefore, the maximum value would be $14,000 USD per coin.

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