Bitcoin’s halving could push coin’s price to just above mining costs’

Bitcoin’s halving could push coin’s price to ‘just above mining costs’

Bitcoin’s halving is just 51 days away, but the debate on Bitcoin‘s price gain/loss post the big event has been going on for a long time.

While some people believe that the halving is already priced in, others are of the opinion that the halving might result in the price of the world’s largest cryptocurrency. For context, the halving happens every four years and it reduces Bitcoin’s block reward by 50%. The upcoming May halving will reduce the block reward from 12.5 bitcoins per block to 6.25 bitcoins per block, and supply inflation from 3.72% to 1.79%. In fact, a recent Kraken report had noted that this would be the first time Bitcoin’s inflation rate would fall below the 2% inflation target used by most central banks for their respective fiat currencies. The attached chart pictures the performance of Bitcoin post its previous two halving events. The first halving took place on 28 November 2012, when the price was $12.50, while the second halving took place on 9 July 2016, when the price of Bitcoin was $650.

Data suggests that Bitcoin’s price has always recorded bullish movement over the long-term, post its halving events. Alas, the coin might not follow the same pattern this year, given the economic fallout caused by the COVID-19 pandemic. However, with many institutional investors entering the crypto-market in recent times, the impact of 2020’s halving might possibly explain whether previous Bitcoin price increases were in fact caused by the block reward halving, or if they were merely a coincidence. Popular trader Peter Brandt recently tweeted that the impact of the block reward halving is less relevant for Bitcoin’s (BTC) price. He referred to Bitcoin’s halving as ‘Grossly overrated.’ In fact, just a few days ago, Mike Novogratz, CEO of Galaxy Digital, had also noted that when it comes to the direction in which the Bitcoin price is headed, it is always a “confidence game.”

Interestingly, on a recent podcast, Bitcoin miner and cryptocurrency investor Kris, being someone who has got skin in the game, gave his predictions for the upcoming halving. Noting that there were a lot of new elements in the Bitcoin ecosystem at present on the institutional end, he asserted that the price of Bitcoin would go up, post the halving event, not to a $20,000, but somewhere between $9,000 -$12,000, “just above the mining costs.” This is a crucial observation as many speculate that Bitcoin’s struggling price, coupled with the upcoming block reward halving, could lend a blow to the fortunes of miners, especially smaller miners, since they won’t even be able to break-even, pushing them to abandon mining altogether or selling their rigs to larger pools. If post-halving, the price of Bitcoin is indeed “just above the mining costs,” miners may be more inclined to stay in business.

Article Produced By
Rakshitha Narasimhan

A Psychology and Journalism graduate, Rakshitha focuses on UK and Indian markets. As a crypto-journalist, her interests lie in blockchain technology adoption across emerging economies.

https://eng.ambcrypto.com/bitcoins-halving-could-push-coins-price-to-just-above-mining-costs/

Related articles

EPAY-X is Encouraging Crypto Adoption by Letting Its Debit Card Users Spend It Anywhere

EPAY-X is Encouraging Crypto Adoption by Letting Its Debit Card Users Spend It Anywhere Offering a new type of crypto debit card that instantly converts cryptocurrency into USD, EPAY-X is making it easier than ever before to spend crypto online and in physical retail locations as well. With no commissions taken on internal transactions and […]

Learn More

Bitcoin Cash Price Prediction 2019: What Price Can BCH Reach This Year?

Bitcoin Cash Price Prediction 2019: What Price Can BCH Reach This Year?                                    While no one can come up with an accurate Bitcoin Cash price prediction, we will be looking at some of the most important factors and expert forecasts that can help you evaluate the market for BCH. What is Bitcoin Cash? Bitcoin […]

Learn More

Singapore and Canada Central Banks Complete First Cross-Border Blockchain Payment

Singapore and Canada Central Banks Complete First Cross-Border Blockchain Payment              The central banks of Singapore and Canada have successfully used their blockchain networks to send each other digital currency, a joint press release confirmed on May 2. As part of the distributed ledger technology (DLT) projects being pursued by both banks, the Monetary Authority […]

Learn More

Leave a Reply

Your email address will not be published. Required fields are marked *