Bitcoin’s long-awaited third halving had an oddly muted effect on its price, with nothing close to the spike that many investors were expecting. Most Bitcoin trading platforms showed that the BTC/USD pair reached the $10,000 mark a few days before the halving, but that it couldn’t manage to stay above that level. Instead, prices went down to $8,106 on the day of the halving.
Prices bounced back since then, with Bitcoin almost reaching $10,000 on May 18th before heading back down again.
While halving has always been bullish for Bitcoin, many investors are wondering what comes next. Will Bitcoin keep rising this time? Will it break the $10,000 mark and stay there? Will it reach a new all-time high?
A much-hyped halving event
Bitcoin’s third halving happened on May 11th, 2020, when block 630,000 was mined. This event reduced the number of newly created BTC coins given to Bitcoin miners from 12.5 BTC to 6.25 BTC.
These coins act as a reward for the miners’ work in securing the network by validating the transactions and adding them to the blockchain. Halving is the process developed by Bitcoin’s creator(s) (Satoshi Nakamoto) to control the BTC money supply over time.
The last two Bitcoin halving events happened on November 28th, 2012 and July 9th, 2016. They were both bullish for Bitcoin with prices reaching all-time highs, which has intensified expectations from crypto investors that history will repeat itself.
Why is Bitcoin’s price expected to rise after a halving?
The main reason why investors expect halving events to support the price of Bitcoin is related to a simple economic concept linked to the way demand and offer relate to each other.
As a halving event reduces the amount of newly created Bitcoins, there are less coins money. If the demand remains the same or increases, then prices should go up, as the money supply is now smaller than before, but still must meet demand.
In the end, miner incentives to secure the Bitcoin blockchain and provide fast transactions stay the same, regardless of how many BTC they receive, because the value of their coins increase in the process. This can attract new miners to support the creation of new BTC coins, providing a more secure and efficient system, which might, in turn, attract more users and support Bitcoin’s price.
Will Bitcoin rise towards $10,000?
Regardless of halving price speculation and discussions, past performance does not necessarily reflect future performance, and no one really knows what will happen – not to mention that the market has matured compared to 2012 and 2016.
“It is a very different world in 2020 than it was during the last two halvings, the derivatives market is much larger and more important,” said Garrick Hileman, head of research at Blockchain.com.
Still, it’s important to highlight that it took a few months after past halving events happened for Bitcoin’s price to reach new record levels, so there is still time for Bitcoin to increase and reach new yearly highs.
The selling pressure around $10,000 seemed to have been too strong for Bitcoin, as it has been evolving between $9,000 and $9,800 for about 10 days. It is now decision time for Bitcoin. Bullish scenarios are looking at Bitcoin staying above the $9,000 level, then breaking the $9,500 resistance zone towards the $10,000 and above. But if sellers keep pushing prices down, Bitcoin could revisit lows below $8,500.
Final word
Up about 30% since the beginning of the year, Bitcoin’s price was expected to rise after the halving event but failed to so. As the event had gotten a lot of attention over the past few months, and most crypto investors were looking forward to it, the rise might already have been considered in the price.
Still, some investors and experts in the industry expect Bitcoin to rise above $10,000 in the coming months. Luno’s CEO, Marcus Swanepoel, even thinks that Bitcoin should return to its all-time highs in 2021.
“I believe we are currently at the beginning of a long upward trend, one that, considering the broader economic environment, is set to experience increased volatility. Nevertheless, with the halving and with some patience, we will see that same sharp increase common with previous halvings, even if it will take a bit longer than usual to get there” he declared.
Given the effects of the coronavirus around the world, many people could turn to cryptocurrencies like Bitcoin as an alternative way to hedge any future inflation that could arise from government stimulus measures, to become their own bank and to take advantage of a decentralized system.
Leave a Comment