Cryptocurrency Market Update: Can Halving create new Bitcoin millionaires?

Bitcoin is less than three weeks to its third halving since it was incepted in 2009. Halving is a rule integrated in Bitcoin code that ensures that mining rewards are slashed by half every four years. This ensures that the network controls inflation while at the same time, preparing Bitcoin to hit the 21 million coin maximum supply.

As this years’ halving approaches, investors and cryptocurrency enthusiasts are seating on the edge with bated breaths in anticipation of possible pre and post-halving rallies. According to Michael Dubrovsky, co-founder at PoWx, a crypto mining firm, in theory “there will be less Bitcoin available to buy if miners have less to sell.”

Consequently, the reduction in mining reward will see to it the number of Bitcoins coming into the market is decreased (lower supply). At the same time, if demand remains the same then price per Bitcoin is likely to go higher. Moreover, if the market encounters an increase in demand due to institutional investors and other parties such as millennials likely capitalize on the rising price of Bitcoin, therefore, a massive price movement would be expected in the months following the halving.

Can history repeat itself?

Data from the past halving events in the Bitcoin network says that the price tends to rally after halving. The first halving in 2012 saw Bitcoin hit an all-time high around $1,000 from $11. The most significant rally took place after the second halving in 2016 when Bitcoin rallied to highs around $20,000 from $700.

Bitcoin May halving projections

The upcoming halving in mid-May is expected to bring in impressive yields to Bitcoin price. Tim Draper, a billionaire investor believes that the price can rally to $250,000. Raoul Pal, a renowned commodities trader says that Bitcoin has the potential to hit $1 million especially if its market capitalization grows to match that of gold. Another expert and analyst on Twitter, Plan B, hints that Bitcoin price could hit $80,000 by 2022.

The previous halvings created numerous Bitcoin millionaires especially for the people who got onto the digital currency bandwagon early enough. For instance, Forbes quotes J.R. Forsyth as one of the people who benefited from Bitcoin immense growth over the years. According to Forsyth:

It became obvious to me that math-based currencies (like bitcoin) would eventually supplant sovereign notes. I mined bitcoin and litecoin very early on and held onto them. The massive appreciation of those assets allowed me to invest in other cryptocurrency technology which ultimately led to the development of Onfo.

If the May halving results in significant gains as the past two events, it is with no doubt that the world will be treated to more Bitcoin millionaires. Institutional investors have kept their interest up despite the crash on March 12. As halving approaches the influx of funds into Bitcoin is expected to go up in anticipation of significant gains.

At the time of writing, Bitcoin price is trading at $7,101. The largest crypto climbed above $7,800 during the Asian hours on Monday but hit a wall at $7,805. More bullish action is expected in the coming session with $8,000 as the initial target.