Bitcoin investors are gearing up for significant gains in 2020.
The reason is the upcoming halving. It is expected to happen on May 18 and is a process in which the rewards received by Bitcoin diggers are halved. This is embedded in the structure of Bitcoin and has already happened twice. In 2012, the award for a single block was 50 and fell to 25, and within a year the price increased by 8200%. In 2016, halving shot the price up 2200%.
However, two examples of history are not empirical evidence of Bitcoin’s behavior in this situation. And then there were other factors such as media propaganda that ignited the cryptocurrency obsession in 2012 and 2017. We could not make estimates on supply alone. Meanwhile, demand is down from years ago.
In addition, the public is already more aware of Bitcoin and its long-term structural problems, which could limit the upward movement. While it has the potential to build confidence in digital currencies in a highly distrusting world, things are now much cheaper for you to buy cryptocurrency instead of “harnessing” the electricity of almost one entire country to digging.
However, Bitcoin enthusiasts continue to believe in the halving process, which causes skeptics to “look with one eye” on cryptocurrencies.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov