- Bitcoin halving and the Coronavirus pandemic are factors that could send the price to new all-time highs.
- Devaluation of currency as a way of cushioning the economy is likely to send investors to cryptoassets.
At exactly 5.30 am AEST, Bitcoin miners arrived at block 630,000 which according to BTC code triggered a halving process. Mining rewards miners get for each block produced have now been reduced to 6.25 BTC from 12.25 BTC. The halving process takes place after an estimated four years to help the network control inflation.
The first and second halvings which took place in 2012 and 2016 respectively culminated in significant growth in Bitcoin price. After halving in 2016, Bitcoin’s parabolic rally in 2017 achieved an all-time high close to $20,000. If history is anything to go by, Bitcoin is expected to grow exponentially towards the end of 2020 and in the course of 2021. Predictions have pointed to new all-time highs above $20,000 while some go to highs of $80,000 and $100,000 respectively.
Bitcoin network has been designed in such a way that only 21 million coins will ever exist. This feature is believed to be a catalyst for another bull run as more than three-quarters of these coins are already in circulation. The CEO of deVere Group, Nigel Green said in regard to the halving:
History teaches us that after this post-halving drop in price, there is a subsequent bull run. Previous Bitcoin halving events have prompted impressive price climbs. The 2016 halving triggered a 300 percent jump in the value of Bitcoin.
There is no reason to believe this time the market will not respond with a longer-term upward trajectory.
Green predicts that Bitcoin would hit levels above $40,000 riding on the impact of the halving which will reduce the supply of new coins. He adds that the COVID-19 pandemic could also trigger another bull-run as more investors seek other forms of investments. Governments around the world are busy printing money to stimulate their economies. Excess money supply is a perfect recipe for inflation and devaluation of currency value. This could see investors seek other alternatives including decentralized assets. As green explains:
Traditional currencies are devalued and inflation fears rise on the back of the mass printing of money, the likes of which we have recently seen in the US, where the nation's central bank has added trillions of dollars to the money supply.
Besides the halving, cryptocurrencies are slowly making it to the mainstream and “are increasingly becoming regarded as the future of money due to the real-world issues they address and growing mass adoption.
Bitcoin price update
At the time of writing, Bitcoin bulls seem to be waking up after the halving went by without a major price action. BTC/USD is trading at $8,816 after a 2.86% rise on the day. As volatility returns, Bitcoin could climb above $9,000 and even tackle the resistance at $9,200. In the medium term, all eyes are pointing to Bitcoin soaring above $10,000.
BTC/USD daily chart
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