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.
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
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, arguesthe importance of the halvingnarrative 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
PlanBanalyst 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 arguesthat 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.
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:
saving fiat/altcoins money to invest in Bitcoins later in the year.” Result: about 20% of users.
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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