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Sorry, Bitcoin bulls: Halving 2020 will not put enough pressure on the price, according to this new study

Sorry, Bitcoin bulls: Halving 2020 will not put enough pressure on the price, according to this new study

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The widespread view that a massive bull run will follow after Bitcoin’s halving in 2020 is not necessarily true, according to a new study.

The research conducted by the blockchain research company Messari has found that the Bitcoin ecosystem is constantly evolving – and it may not be a good idea to predict the impact of the next halving based solely on the previous two.

How will Bitcoin’s halving work?

According to past trends, Bitcoin generally gains momentum twelve months before halving and the following year. The optimistic BTC supporters naturally assume that the relative success of the asset in 2019 perfectly matched this trend.

Despite all the setbacks, Bitcoin is considered the best performing commodity in 2019. Many traders and analysts believe it is very likely or almost certain that Bitcoin will enter a new bullish phase at or shortly after the next halving .

However, according to the Messari study, there is no fundamental reason why BTC should skyrocket after one halving – and this also applies to the next one. The study finds that the “high stock-to-flow ratio” argument – the basic logical construct that is often used to link Bitcoin 2020 in half to the next big bull run – is grounded on is wrong.

High S2F does not guarantee a bull run after halving

For the uninitiated: The stock-to-flow ratio (S2F) of a commodity is a metric that compares the total volume in stock in relation to the annual offer.

Bitcoin, like gold, has a very high S2F rate due to its scarcity-driven model. BTC is expected to be the commodity with the highest S2F quota by 2025 as block rewards decrease by 50% at the end of each halving.

However, the co-authors of the Messari study are not convinced that the high S2F rate means a lot for the future BTC price. Since Bitcoin is a permanently fixed supply good, in its opinion it qualifies as a “completely inelastic good”.

They argue that the miners are never able to control Bitcoin’s net supply regardless of market demand or lack thereof. The study also claims that the only factor that can lead to the next Bitcoin Bull Run is an increase in demand – not the predetermined 50% reduction in block rewards.

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