With Bitcoin halving 2020 in just 26 days, what can we expect? Will the asset meet the overwhelming expectations or will it stay at the same price level?
Bitcoin halving 2020, the third of such event since the inception of the asset 11 years ago, has attracted a lot of attention globally. With the past two events being a major catalyst to the Bitcoin price rallying, the pressure remains on the asset to maintain the standard already set and deliver a new all-time high.
If you have been following the crypto market even for the past few weeks only, you must have come across the term Bitcoin halving, which is extremely popular today in Google searches. It is an event that carries with it much more sense than many out there are just presuming.
The fundamentals have been made more complex by the ongoing coronavirus pandemic which has increased panic fear in the crypto community. The volatility is expected to sharply increase as we approach the event and after the event. Meanwhile, only 26 days are said to be left before Bitcoin halving 2020.
Bitcoin Having 2020 Price Theories
A number of theories have been thrown out there by different people regarding Bitcoin price in relation to the halving event. Although none can claim to have more weight than the other, there is no harm in highlighting them.
The most popular theory with most people is that the price will respect the aftermath of the previous events, where it rallied to a new all-time high a year later. The theory is backed by the fact that the Bitcoin supply drastically falls after the halving event, and the demand is on the rise for the rare commodity.
As a result, the price skyrocketed to cater to the lack of inflation as seen with the fiat system, where money printing is the order of the day to save governments in their projects. Over a decade past its inception, the asset has penetrated almost all corners of the globe.
The other theory was highlighted by coin metrics, from the basis that Bitcoin miners are the primary source of new BTC, and their overall behavior significantly affects the market price.
“Since miner variable costs are slow-moving and fairly constant in fiat terms, miners are required to sell less of their block rewards to cover their expenses during periods of rising crypto prices. On the other hand, when crypto prices are falling, they are required to sell more. Under this theory, miners have a pro-cyclical effect on the market, in that they further exacerbate price increases. There are limitations to this dynamic, however,” tells the theory.
The report suggested that the dynamics which are associated with the theory above can be altered by the ability for more miners to hedge against the future market price. The miners can also use their coin reward as collateral for loans denominated in fiat currency, hence offsetting the theory.