Bitcoin halving is coming in May this year, and many industry celebrities have judged the future currency price. As the founder of the digital asset commercial bank Galaxy digital, Mike Novogratz once again made a prediction on the price of Bitcoin. He said that Bitcoin could break the all-time high of $ 20,000 in 2020.
(Image source: pxfuel )
Just a few months ago (between bitcoin's recent rally), Novogratz commented that bitcoin would reach $ 12,000. Will Novogratzd's predictions be bold? As Bitcoin's halving approached, analysts were divided over how the future price of the currency will change. Some people are skeptical of the rise in the price of the currency. They do not believe that Bitcoin will have a real price increase, while others believe that the current price of the currency is still in a depression.
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What's so special about Bitcoin halving?
The halving of bitcoin means that every four years, the reward of newly mined bitcoin blocks will be halved, which will reduce the number of bitcoins newly entered into circulation.
However, more important than the established code is that halving may bring some economic benefits, and the question is whether history can repeat itself. As with any market, relying on historical data is an important reference when predicting any type of price movement. The price of Bitcoin has soared nearly a thousand times since the first halving.
Historical data shows that the first halving of Bitcoin occurred on November 28, 2012. After a year, the price of Bitcoin rose from $ 11 to $ 1,100, a 100-fold increase. The second halving took place in July 2016. As investor interest in this asset increased, the price of Bitcoin also rose from $ 576 to $ 650. A year later, on July 9, 2017, Bitcoin soared to $ 2,500, with a market value increase of 434%.
The price trend of Bitcoin after halving in 2016. Source: Coin360.com
History may be fickle, because there are many factors that can affect the price of a currency. Nonetheless, it does give people an idea of how assets and markets may react in the event of a major event, such as halving assets. Therefore, for long-term investors, the next halving may continue to provide a sustainable positive driving force for the currency price.
Let's guess the maximum currency price after halving!
Historical data is one thing, but market sentiment is another, especially when there are huge fluctuations in the price of Bitcoin. With Bitcoin's third halving approaching, analysts disagree on whether the price of the currency will rise or fall.
Some people believe that history will repeat itself, and the price of Bitcoin will follow a similar pattern, rising with increasing media coverage and rising investment sentiment. On February 20 this year, Zhao Changpeng, chief executive of cryptocurrency exchange Binance, said that the price of bitcoin could reach a new high before halving. Those who are optimistic about Bitcoin's prospects also said that the price of Bitcoin may continue to rise after halving due to a decrease in the supply of Bitcoin.
At the same time, the number of searches for "Bitcoin halved" on Google has reached a high level, which also indicates that the market may already be on the verge of a bull market. The Google Search Index shows a significant increase in interest in halving Bitcoin. A year ago, its benchmark index was only 10, and today it is close to 100.
The number of Google searches for "half of Bitcoin" has increased in the past 12 months. Source: Google Trends
Nonetheless, many analysts believe that halving in itself is not the real driver of bitcoin price rises, and the real factor is that people fear that they will miss out on the opportunity for the skyrocketing currency price. As investor interest in such assets rises, many investors worry that they won't be able to catch the last train of rising currency prices.
Is the coin price still in a value depression?
If the price of Bitcoin continues to rise, then the supply-demand relationship may play a role in it. When the supply of required goods or assets decreases, their prices usually rise. Of course, there are exceptions to this rule, and many analysts believe that such exceptions may apply to Bitcoin. Although Zhao Changpeng did not provide specific forecast prices, he recently stated:
I personally think that the halving effect has not been reflected in the price of Bitcoin.
The price of currency may also develop like this: under the influence of competitors, the price of currency remains unchanged, and other mature cryptocurrencies compete to attract the interest of investors and users. In addition, the reduction of mining rewards may affect the mining of miners, thereby further reducing the supply of Bitcoin. And those mining pools that continue to mine may sell Bitcoin at a higher price, thereby increasing the market price of Bitcoin.
CEX.io CEO Alexander Kravets believes that the stock-to-flow model widely used and used to measure the ratio of existing supply to annual output is basically accurate in predicting the price of coins in the past. Kravets made predictions for the price of the currency in 2020, and he told Cointelegraph:
If we treat Bitcoin as a commodity like the Commodity Futures Trading Commission (CFTC), then Bitcoin, like other commodities, has a bottom price that represents the cost of production (the price of the miner's shutdown coin). I think what we see at the end of 2019 may be the bottom price of $ 6,800, but as the block reward is halved, we can see that the bottom price will rise to a level that many people guess is slightly lower than $ 9,000.
Many traders are fully prepared for the upcoming halving, let's take a look at their predictions for the price of the currency.
The blockchain analysis provider TradeBlock fully revealed that Bitcoin's price rose due to scarcity after halving, and the company believes that the price of each Bitcoin will reach $ 125,000 after halving.
At the same time, some analysts expect the price of Bitcoin to fall before halving, but the vast majority of them believe that the price of currency will rise after halving. For example, financial market analyst Salah-Eddine Bouhmidi predicted:
After halving, I think Bitcoin will reach $ 14,000 by 2021. In addition to halving, other external factors will also have a positive impact on the cryptocurrency market.
Serial entrepreneur Evan Luthra previously told Cointelegraph that if Bitcoin's price stabilized above $ 7,000 in February 2020, it could surge to more than $ 13,920 by the end of the year.
According to Paolo Ardoino, CTO of Bitfinex, there may be some FUD (fear, uncertainty, and doubt) in the market before Bitcoin is halved. He said:
I think the price of Bitcoin will reach at least $ 20,000 by the end of 2020.
Fundstrat's Tom Lee is more optimistic about Bitcoin. He believes that Bitcoin may reach $ 27,000 by August 2020.
Analyst PlanB predicts that halving Bitcoin will bring a crazy bull market, and by the end of 2021, the price of the currency will rise to about $ 100,000. Kraken CEO Jesse Powell tweeted:
When I heard people talking about the highest price of bitcoin in the bull market, my judgment was $ 100,000, maybe to $ 1 million. I think my prediction is correct.
Blockstream CEO Adam Back shares the same view:
With the halving of bitcoin and the technical fundamentals coming into play, the price of the coin may be as high as $ 100,000.
Rekt Capital takes the most optimistic stance, saying on Twitter:
The price of one bitcoin will be $ 385,000 to $ 400,000.
Does the currency price fall instead of rising?
At the same time, skeptics say that the halving effect is already reflected in the value of bitcoin, and there is no need for people to spend money on bitcoin. These skeptics are relying on the assumption that serious investors may trade derivatives rather than speculate on the price of Bitcoin.
Bitcoin analyst Tone Vays is one such skeptic, but he believes that until the price of Bitcoin is halved, the price of Bitcoin will not be less than $ 5,000. Charles Hwang also agreed with Vays' prediction, saying:
If nothing else, each bitcoin would be $ 10,000.
Commenting on the halving effect of Bitcoin, Jason Williams, co-founder of digital asset fund Morgan Creek digital, said that the halving will not have any impact on the price of Bitcoin, nor will it become an important event affecting the development of cryptocurrencies.
Forecasts do not represent true price movements
It's been a long time since the first two halvings in 2012 and 2016, and Bitcoin's price volatility remains intense. Miners can simply hold assets and wait for prices to rise. Compared with the actual transaction volume, the amount of newly mined bitcoins is negligible, so calculating the supply of newly mined bitcoins is meaningless. The knock-on effect will still play a role in the market, and a halving may cause many investors to panic, pushing the price of bitcoin up again and spiraling the price of the coin up.
The halving of Bitcoin is inevitable, and the big Vs on Twitter have also made various predictions on the price of the coin. Regardless of history, how Bitcoin's price will develop around halving, it is quite difficult to make accurate predictions. However, if traditional market forces are applied to the cryptocurrency market to conduct an in-depth analysis of investor sentiment, it may be the best indicator to judge the price trend.