Bitcoin distinguishes itself as a deflationary asset with a hard cap of 21 million bitcoins, and its unique protocol enforces periodic reductions in block rewards for miners. BTC Scheduled every four years, this programmed halving of Bitcoin's block rewards is a cornerstone of its monetary policy and a topic of much discussion in the crypto community.
Naturally, the crypto world is eagerly anticipating Bitcoin’s forthcoming halving event anticipated in May 2020, with history suggesting it might be a catalyst for price increases. halving .”
Yet, there’s a camp of analysts who suggest that if Bitcoin's price doesn’t surge before the halving, miners could face unchanged operational costs but with halved revenue.
This scenario presents a challenging outlook, especially given the recent sell-offs affecting both traditional and crypto markets.
The significant March 12th drop saw the Dow Jones, Nasdaq, and S&P 500 plunge, marking an end to over a decade of growth for U.S. markets.
BTC Dragged Down with U.S. Equities
Massive sell-offs in risk-sensitive stocks, spurred by the global coronavirus pandemic and a geopolitical oil price dispute, have also impacted the risk-prone crypto investments. bear-market thresholds Given these economic headwinds, Bitcoin's price trajectory seems unfavorable for mitigating concerns related to the upcoming halving, necessitating even greater efforts to regain ground.
Critics, like the gold advocate Peter Schiff, have pointed to Bitcoin's recent performance as evidence of potential trouble for the halving’s expected outcomes.
Per crypto analytics site {-{em}-}Messari{-{/em}-}, bitcoin has been hit particularly hard by this acute financial flight. At the time of writing, BTC was trading at $5,900 USD — down 26 percent on the day, down 38 percent on the week, and down 22 percent year to date.
With the market turmoil following the March 9th drops, skepticism is rife about the anticipated halving benefits.
We anticipate a notable transition when Bitcoin's block rewards are reduced from 12.5 to 6.25 BTC in two months, though the exact impacts of this aren't yet clear. cryptoeconomy sell-off , Schiff said:
Litecoin’s halving experience offers a precedent; when its price failed to double post-halving, many miners abandoned the network, drastically reducing its hashrate and security.
The Litecoin Playbook?
Bitcoin could be heading towards a similar cliff, as The Block's analyst Matteo Leibowitz suggests.
“Bitcoin’s current valuation process is volatile: without a price doubling soon, miners will find themselves with slashed revenues, potentially halving network security and diminishing Bitcoin’s overall appeal,” Leibowitz notes.
Still, there are those who believe this year's Bitcoin halving could prove advantageous, citing the stock-to-flow model's prognosis for significant post-halving valuation growth. noted in a recent report that:
An update on the S2F model shows the $7750 BTC price aligns with its forecast, indicating potential for substantial appreciation.
“Post-May 2020 halving, Bitcoin is expected to reach a market valuation of $1 trillion, potentially driving its price up to $55,000,” as per PlanB’s predictions.
#bitcoin William M. Peaster is a seasoned writer and editor with expertise in the Ethereum, Dai, and Bitcoin sectors. His work appears on platforms like Blockonomi and Binance Academy. He's keen on smart contracts, DAOs, and the Lightning Network and is learning Solidity. Reach him on Telegram: @wmpeaster pic.twitter.com/utYawBDlh4
— PlanB (@100trillionUSD) March 11, 2020
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