Over the past few months hundreds of people have worked to answer this question. However, less than a day after the event occurs, the million dollar question continues to be: Is Halving going to drive Bitcoin’s price? And although the answer to this is not easy, here at CryptoTrend we will do our best to respond.
What does the history of Halving tell us?
Of course, since this is not the first Halving since the birth of Bitcoin, but the third, the first instinct to try to understand what effects it may have on the price of cryptocurrency, is to analyze what happened in previous Bitcoin Halvings.
And it is that, if Halving was designed by Satoshi Nakamoto as a deflationary mechanism for cryptocurrency. With the aim of avoiding a decrease in its value over time, by gradually reducing the expansion of its money supply, following the gold model. We can say that the objectives have been met so far.
Thus, the first Bitcoin Halving occurred in 2012, generated a bullish rally in the price of the cryptocurrency. With a spectacular 50.162% rise that positioned BTC at $ 1,151 at its peak. While the second Halving in 2016 had a more modest percentage increase of only 9,054%, but a much more impressive price. Reaching $ 19,499 per Bitcoin in December 2017, its all-time high.
Despite this, it is important to note that these bullish rallies did not start right after Bitcoin’s Halving occurred. Rather, conversely, the cryptocurrency’s upward path would have started almost a year before the 210,000 block was mined and Halving occurred.
The current context
Although history seems to give us reasons to be optimistic regarding the price of Bitcoin after Halving. There is one more factor that we must consider before claiming victory and sitting quietly waiting for the increase in the price of BTC. We are referring to the Coronavirus crisis, and the changes it is causing in the global economy.
And in this regard, we find two positions. Well, although we all agree that an economic recession is approaching like we have never experienced globally. Not all of us agree on the effect it will have on the value of the US dollar and Fiat money in general.
Thus, within the crypto community, the analysis appears to indicate that all the financial stimuli that the world’s governments are providing to their companies will cause a massive depreciation of Fiat money, especially the US dollar. By increasing monetary liquidity in an unbridled way, without the real economy being able to support this increase.
However, analysts of the international economy outside the crypto world do not seem to agree very much with this theory. Well, contrary to what many crypto influencers believe, stimulus packages will increase the demand for dollars worldwide.
As governments require more and more US dollars to support their own stimulus plans. So even with the huge monetary expansion carried out by the United States Federal Reserve, the value of the dollar will increase amid this crisis.
So … what will happen to Bitcoin after Halving?
Having said all of the above, the trend for the price of Bitcoin seems to be not as clear as many crypto influencers expect. Well, first of all, the trend of previous Bitcoin Halving does not lead us to think that there will be an immediate and pronounced increase in the price of BTC.
If this increase occurs, it will be carried out gradually, following the trend of previous rallies generated by Halvings. There is also the possibility that this time, the demand for Bitcoin that would support an increase in its price, may not be able to maintain itself in the medium term.
And secondly, the conditions of the world economy. Although they could potentially help the price of Bitcoin, if it is proven that the cryptocurrency can serve as an active store of value. They could also bring down the virtual currency, if investors prefer to take refuge in a strengthened dollar, rather than BTC.
Therefore, although the future of Bitcoin is not closed at all, and depends on a multitude of factors. We can safely assure you that most indicators seem to point to the cryptocurrency seeing an increase in value. And that Halving will effectively drive its price.
But this will not happen immediately after Halving. In fact, it will be observed in the next year following the trend of previous Halving. What also seems to be the opinion of the majority of our followers of Twitter. Those who up to now have voted “Much” when asked how much Halving will boost BTC.