What’s Likely to Make Bitcoin Halving Different in 2020?
So much seems to have changed in the crypto space since the last Bitcoin block reward halving but no one knows for sure what this year’s edition will bring and to what extent its impact will be felt on the entire cryptocurrency market.
The quadrennial cutting-into-two of Bitcoin’s supply – a process meant to strengthen its core design as a deflationary currency that has a controlled total supply of 21 million (about 18.36 million already in circulation) – is slated for Tuesday May 12.
While global search interest for the term ‘halving’ may have risen up to a maximum 22 point range – on a scale of 1 to 100 – in July 2016 when the last halving event was held, according to Google Trends, the interest over time has more than tripled – at 100 – as at the time of this writing.
Yes, the awareness level has improved and new investors have entered the crypto market in the last four years. The recent development ahead of the halving in which billionaire Paul Tudor claims his Tudor BVI fund is entering the Bitcoin space – and comparing it to gold’s role in 1970s – is spectacular as it serves two purposes. The Fund’s buying as much as a low single-digit percentage of its assets in Bitcoin futures will add to the cryptocurrency’s market cap. It will also instill confidence in or push other major players to rethink their interest in the crypto space.
Also ahead of the halving, as shares in Asia climbed in early trade on Friday as US and China’s trade chiefs reaffirmed their cooperation in a phone call, Bitcoin posted a surge above $10,000 for the first time since late February.
The halving is coming days after the price of Bitcoin hit $10,000 again which, in itself, supposedly has an implication on breaking a psychological barrier around the price movement going by previous records. When it crossed $10,000 in Dec 2017, it led to creating an all-time high record of almost $20,000 in four weeks before crashing down to around $6,500 in early 2018. It rose slightly above $10,000 by March 2018 but pulled back at $11,000 before slumping to a low of $3,200 year end.
The proposed launch of Facebook’s Libra Project pushed the price above $10,000 again by June 2019 to $14,000 but held back down to $6,800 following regulators’ objection. President Xi Jingpin’s supposed ‘endorsement’ of Blockchain technology in China pushed Bitcoin’s price by 40% in a day to $10,300 then back to $6,500. By early 2020, Bitcoin’s rise over $10,000 was cut short by the March 12 crash which sent the price as low as $3,800.
The price of Bitcoin has now recovered to the $10,000 price range – a 160% recovery – in seven weeks since the March 12 ‘Black Thursday’ price plunge when Bitcoin suffered one of its most quickest and biggest crashes in 24 hours (from $7,800 to $4,900 range). Regardless of whether it may remain bullish, the market expects the halving to add value to Bitcoin over time.
#whalebreedingseason Whale population spotted increasing in the wild. They've been in solid accumulation mode since January unperturbed by the COVID crash. This is macro bullish.
— Willy Woo (@woonomic) May 6, 2020
Same price rise expectation
The 2020 halving is not expected to be an exception from previous ones with regards to a rise in Bitcoin price. Though not fixed, the general assumption is that once the demand remains the same as the supply halves – from 12.5 to 6.25 BTC per block – the price of Bitcoin has to feel a buying pressure due to scarcity thus sending its value higher.
The week has seen a slight spike in the price of the cryptocurrency with about 20% rise over a 7-day period from $8,801 to $10,000. The halving adds to the build-up from data by industry insights provider, Glassnode, which shows that more unique entities – a cluster of addresses that are controlled by the same network (or whales holding more than 1000 BTC)- have been active of late. However, it’s not clear if the momentum will be sustained.
“With the bitcoin halving fast approaching, we believe a short-term pullback is highly likely immediately post-halving, as traders begin taking profits,” said Lennard Neo, head of research at Stack AM Pte, which provides cryptocurrency trackers and index funds, to Aljazeera. “In the longer-term, however, we can expect bitcoin to register significant price appreciation toward the end of 2020 and early 2021.”