Bitcoin, the most popular cryptocurrency in the world, is set to “halve” in less than a week (Tuesday 12 May). In short, “halving” means that miners at Bitcoin (BTC) will receive half as much for each coin mined as they did on May 11 as of May 12. Miners are currently paid for 12.5 BTC each coin they mine. They’ll just obtain BTC 6.25 next Tuesday.
Bitcoins are halved every four years and this will be the third such occurrence in the fairly short history of the currency. Miners initially won BTC 50 back in 2009.
What would happen to Bitcoin’s price in the aftermath of halving has been the topic of much discussion.
A lower yield for mining would, in principle, decrease the amount of coins mined, thereby increasing scarcity. More scarcity, in effect, will result in the value of each BTC increasing.
BTC rates, however, have (temporarily) fallen since halving in the past. This was probably due to certain BTC holders / miners liquidating their assets at the time, briefly flooding the market and counteracting the short-term decrease in availability. Expanding the timeframe to several weeks / months, persistent price rises for the BTC accompanied halving events.
SportsBettingDime.com (SBD) analysts see the next half case playing out a little differently from the previous halvings. They set the odds at 1/2 (or -200) that Bitcoin’s price is higher on May 19 than it’s at the end of the day on May 12 (i.e. just one week after halving BTC). As for the high of $10,367 in 2020, they set the odds of BTC surpassing it by the end of September 2020 at 3/2(+150). When it comes to BTC’s all-time high of $19,783 (circa Dec. 2017), they are more reserved, setting the over / under for it to return to those heights at Dec. 31, 2022.
Essentially, they expect that the next half occurrence does lead to almost immediate increases in the value of BTC, and that increases will (somewhat) continue slowly over the next few months.
The main explanation for this is the recent trend against BTC during coronavirus. On March 12, 2020 – the day most of America, including most major sports leagues, was shut down, BTC’s value took a huge hit, falling from $7,955 to $5,800 (around 27 percent lowering in value). The day’s price drop hasn’t been special to BTC. Worldwide financial markets dropped, as investors feared that COVID-19 would dramatically affect the global economy as a whole.
However, BTC has recovered all of those single-day losses and more in the nearly two months since. Currently it trades at around $8,900. It has risen 7 straight weeks in value. Although that’s still short of its $10,367 2020 peak on Feb. 14 (spurred on by online flower orders, maybe?) that’s higher than it was at the beginning of March.
As conditions for social distancing continue, more and more of the world’s economy is shifting online. More online trading is always going to help an unregulated crypto-currency.
Coronavirus is also leading people to challenge conventional currency stability. Huge government stimulus programmes, along with currencies in other nations hit hard by the epidemic, would contribute to inflation for the US dollar. BTC is well placed in conventional currencies to reap the benefits of the mistrust.
The macro-influences essentially weigh in favour of BTC continuing to gain momentum.