What Happens After May 12th?
As many Bitcoin enthusiasts know, the halvening occured on May 12th which means the number of bitcoins (BTC) entering circulation every 10 minutes, aka block rewards, will fall by half, from 12.5 to 6.25 which also means miners begin receiving 50 percent less BTC for verifying transactions. The law of supply and demand has an effect on everything including bitcoin because there is a finite number of BTC and we must now try to forecast whether the halvening will produce positive or negative results, vis a vis the price of BTC.
If nothing else, the #halvening has decoupled bitcoin from the stock markets.
Since the event, orange coin is up 8% while the US stock market is down 4%. pic.twitter.com/2XEjbrbE69
— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) May 13, 2020
There are many who speculate the halvening will cause a short-term loss followed by a long-term gain which would reflect the halvening effect back in 2016 when it last occurred. What we must realize is that scarcity of Bitcoin was built into the code so at the beginning of the 22nd century Bitcoin will reach a ceiling of 21 million from where it now stands at roughly 18.4 million. But the new bitcoins introduced into the system will slow down, way down, and that is what the halvening is all about. The supply will continue to be halved every four years until it reaches a maximum supply of 21 million over the next 100 years.
Let’s hear from the cryptocurrency gurus, the Bitcoin savants, and those whose life’s work revolves around digital currency.
Marcus Swanepoel, co-founder and CEO at Luno, a wallet-provider stated, “By looking at historical growth after previous halvings, the price has seen a massive increase of 5281% from the first to the second halving, and 1217%* from the second until today. If this decreasing growth trend continues, we could look at a potential price growth of approx. 270% until the fourth halving, or close to $33,000 in 2024.”
Pantera Capital Founder and CEO Dan Morehead is also a fan and offered the following, “Bitcoin has historically bottomed 459 days prior to the halving, climbed leading into it, and then exploded to the upside afterward. The post-halving rallies have averaged 446 days – from the halving to the peak of that bull cycle. In this cycle, the market did in fact trough 514 days before the halving. If this relationship holds... bitcoin would peak at $115,212 /BTC… I realize that price may sound ludicrous to some today... Just sayin’ that there’s more than a 50-50 chance bitcoin goes up – and goes up big.”
Danny Scott, CEO of British-based digital currency exchange CoinCorner, had this to say about the halvening, “Many eyes have been on bitcoin since 2017, with people eagerly awaiting its next big moment. We believe that moment is coming and we can expect to see an explosive year for bitcoin. After the two previous halvings (halvenings), we’ve seen the price reach an all-time high within three to nine months. Looking at the stock-to-flow model, which assumes scarcity drives value through supply and demand, we can hope for the $100,000 region to hit within the next 12 to 18 months.”
Those are optimistic words coming from the mouths of people whose investment portfolios might tend to make them a bit biased towards bitcoin but that doesn’t mean what they say is without merit. However, there is no doubt that bitcoin is volatile as evidenced by the fact that a year ago it was worth a little over $7100 and now it is hovering near $9000. Not a bad return for one year but let’s not forget that during that one-year cycle that the price has pinballed between $4600 and $11,600.
Lest we get too charmed by what could happen after the halvening, let’s get a sobering dose of what could be a reality from one who is not nearly as bullish on BTC. Nouriel Roubini, an American economist and chairman of Roubini Macro Associates LLC, was not shy in his disdain for the cryptocurrency, “Bitcoin crashes by 15% in 7 minutes on NO news: a rigged, totally manipulated, whales-controlled market where most transactions (90%) volumes are false as exchanges pretend to have the liquidity they don’t have. Massive pump & dump, spoofing, front running, wash trading! Total Scam!”
Regardless of which side of the aisle you walk, one thing we know for sure is that the halvening is upon us and whether BTC soars or crashes will be evident soon enough.