The Bitcoin Halving: 200 Days To Go

The next Bitcoin halving is now 200 days away, or 201 to be precise at the time of writing (25th October, 2019). That might still seem quite a long way off, but when you take into account halvings are only a quadrennial occurrence, taking place after every 210,000 blocks are mined on the Bitcoin blockchain, it’s no surprise that discourse in the crypto world is building up about the next Bitcoin halving.

When this happens, the reward for miners will be cut from 12.5 to 6.25 coins. It is scheduled to take place on May 14, 2020 and is set to be a huge event in the history of Bitcoin. Let’s take a look at some of the conversations people in the crypto world are having.

Last Friday, October, 19 2019, was also a significant milestone in the history of Bitcoin. It was the day that the amount of blocks mined on the Bitcoin blockchain surpassed 600,000. Although really it is only an arbitrary event in itself, it’s a timely reminder, along with next May’s halving, of the ever-increasing difficulty of Bitcoin mining.

Bitcoin is notorious for its volatility, but there is support to the assertion that there is a general correlation between the difficulty of Bitcoin mining and its price. As a case in point, in the first five months of 2019, Bitcoin mining difficulty increased by 33%, and its price increased by 100%.

When it comes to Bitcoin halving events, there have been 2 to date. The first one took place in 2012, with the second one taking place in 2016. In the year after the first halving, the price of Bitcoin increased ten-fold. In the year following the second halving, the price of Bitcoin rocketed by 400%. Therefore, it’s no bombshell that the consensus is that the price of Bitcoin will rise after next year’s projected halving. But how much by, or indeed if it will at all ( there are actually some who are expressing doubt on if the price actually will rise) is very much open to debate.

To the moon?

Anyone with more than a passing interest in crypto is probably familiar with the phrase ‘to the moon’. As it implies, it means when prices of an asset rocket and seemingly have no limit. Many in the crypto community are fully on board with this and are all set for blast off, ready for Bitcoin to go to the moon after the halving. However, the predictions of the levels at which the price will reach vary immensely.

One of the more extreme predictions of Bitcoin’s price comes from world-renowned antivirus pioneer John McAfee. He predicts that its price will reach a whopping $1million by the end of 2020. The logic behind this is down to its supply, and mass adoption. In a recent interview with Forbes, he said that the supply of Bitcoin, which is capped at 21 million, isn’t as high as many people think because of how careless many people were with their usage of it in its early days, as it didn’t at the time have much significant value. A prime example of this is the story of a storage device containing 7,500 Bitcoin being  thrown away on a dump in the UK in 2013, which at the time was worth $7.5 million (and considerably more if it happened now!)

McAfee said in the interview up to 7 million of the 21 million Bitcoins “have been lost forever, and then, if Satoshi (Nakamoto, the pseudonymous person behind the creation of Bitcoin ) is dead, add a few more million.” There’s no evidence that the anonymous creator of Bitcoin is dead, but who knows? Also, he may well have a point regarding the underestimation of Bitcoin’s actual supply.

Another reasoning of McAfee behind his prediction is his conviction that sooner or later, the mass adoption of Bitcoin will be realized, and depending on how far the mass adoption goes, it could eventually be worth as much as $10million a coin. He predicts that if Bitcoin “gets to be 5% of world financial transactions, which, you all know it will,” or even “maybe 10% or 20%,” then Bitcoin would be worth “$10 million per coin, based on those numbers.”

Most other ‘to the moon’ predictions aren’t quite as stratospheric as McAfee. Twitter Bitcoin price analyst Plan B, creator of one of the most well-known and accurate Bitcoin price prediction models, has expressed his confidence that the price of Bitcoin will hit $55,000 after the next halving and $100,000 by the end of 2021. He makes this conclusion by hypothesizing that Bitcoin’s price is correlated to its stock-to-flow ratio. With the increasing difficulty of Bitcoin mining as its supply becomes more limited, he concludes that this is the main driving force behind its the increase in its price, and this will accelerate after next year’s halving.

Not to the moon?

While everybody with a long-term hodl investment in Bitcoin wishes very much that it will go to the moon, not everybody in the crypto world shares this view. Some are saying that the expected price surge of Bitcoin after the halving might not happen after all, because the market is expecting it to happen, and so the halving is already being factored into its price. One such individual holding this view is Jihan Wu, co-founder and ex-CEO of Bitmain, a company that manufactures Bitcoin mining equipment. He also points it to the fact that Litecoin has actually gone down in price since its halving in August. In a recent interview with Coin Desk, Wu said ““During the first and second halving, people didn’t know what to expect, and during the second halving, the scaling debate complicated the situation. Now people are expecting it.”

A similar viewpoint is also held in this recent article from the Coin Telegraph. It speculates, that contrary to the widely held assumption that the price of Bitcoin will shoot up immediately after the next halving occurs, what could actually happen is a “buy the rumor, sell the news” type of scenario. This could result in a dump actually happening after an initial spike, at least in the short-term, because of the widely anticipated nature of the event.

Final thoughts

Naturally, it’s impossible to firmly conclude what will happen to Bitcoin’s price after the next halving, but it sure is fun speculating. There is a general sentiment that the price will rise, a lot of which has been inflamed by the fact that there were significant price rises after the first two halvings. However, as with anything in the world of crypto, or indeed life in general, making assumptions can be a dangerous game.   Other environmental factors could also come into play to affect its price, such as a possible impending recession, and the uncertainty over Facebook’s cryptocurrency Libra. Technical analysis can go some way to making educated predictions, though. What is for sure is, however it pans out, we’re all in for a hell of a ride.