Bitcoin

2020 Bitcoin Halving – Crypto Asset Price Could Experience 10x

With Litecoin’s halving event due in less than a month, everyone is talking about the effect of halving on the digital asset’s price. Since halving is set to decrease the supply of the asset in the market, the increased demand is naturally expected to drive the price up.

Henry Stanley, CEO of ICOAxiom talked to BlockPublisher on bitcoin halving and related to a very significant fact when the last time it happened in 2016. He said;

In 2016, when bitcoin halved the last time, it then went on to experience almost a 10x in price. It went from $268 to over $2,500 at that time. If we are still in a bull market at that time, I think we could see a similar price surge.

For the leading cryptocurrency of the world, bitcoin, the halving event is expected to come in May of 2020. In order to understand what possible effects this event is going to have on the asset’s much-anticipated price, which stands at a staggering $12,607 at the time writing, the need is to understand the technicalities of the halving event.

Bitcoin uses a mining algorithm at its core which is called proof-of-work (PoW). As per this algorithm, miners participating in the network need to solve a cryptographic puzzle to get the reward and to add the data of new transactions in the previous record.

Whoever solves the puzzle first gets the reward in the form of newly-minted bitcoin. Currently, the reward amount is 12.5 bitcoins. On average, 12.5 newly-minted bitcoins are added in the bitcoin network every 10 minutes thus maintaining a certain level of supply.

But in order to cancel out the issue of inflation that has plagued the fiat-based banking system, the reward is cut down by half every four years as per the algorithm. This halving thus reduces the supply of the digital asset in the network, hence simple supply-and-demand market principle tends to drive the price up. Various thought leaders are predicting that bitcoin will rise in its price prior to its upcoming halving event.

In an exclusive comment for BlockPublisher, Maurício Giordano, a bitcoin investor and CTO of InEvent, stated:

Theoretically, when this event occurs (once every four years), the price should double – since it’s twice the work to mine the same amount of bitcoin, its price should be doubled. Since bitcoin investors usually decide to buy when they predict specific events, for the halving (predictable), they decide to buy weeks or months prior to it. I predict there will be a large price increase around mid-April 2020, but I never give out recommendations to anyone if they should buy or sell.

READ ALSO: Bitcoin Price Will be More Than $100K Based on it’s Future Service

The mining cost of bitcoin roughly stands around the area of $3,500 and $4,000. As a result of the halving event, the cost will get doubled. On paper, the price should also double to keep the same incentive for miners to participate in the network.

If bitcoin’s price falls below this cost of acquisition, the incentive for miners to stay in the network will get canceled and network health factors like hash rate will get decreased as a result of miners leaving the ecosystem. Bitcoin needs to stay above the cost of acquisition if it wants to survive long-term.

Usually, halving is associated with a price spike. Litecoin, which is characterized as the silver to bitcoin’s gold, is going to have its halving event in less than a month. In the hindsight of the halving, we have already seen the digital asset’s price rise up over the past six months by around a mammoth 300%. The digital asset has outperformed bitcoin in terms of its price rise this current year.

READ ALSO: This Crypto Gained 466% Since Jan 2019 and it’s Not Bitcoin

Although bitcoin played a major role in driving the crypto market up, the halving, quite possibly, has also played a role in spiking Litecoin up. Over the next few weeks, a further increase is now strongly expected from Litecoin.

The previous halving in the bitcoin ecosystem resulted in a 10x price spike. If it is to be believed that markets have memories, we could witness a rise like this again, only this time around the ecosystem has changed. There is a lot of trust built up in bitcoin this time around as big companies like Facebook have adopted the technology lying underneath the crypto, blockchain.

Developments are being made on both technological and legislative fronts at a rapid pace. A healthy ecosystem is also the reason why big predictions regarding bitcoin’s price are coming out of the crypto space. Heavy influencers like Anthony Pompliano (Pomp) and John McAfee are predicting prices as high as $100,000 and a million dollars for the future. If the price spike ever happens, considering how volatile and uncertain the bitcoin world is, the halving event is expected to play a big role in it.

READ ALSO: Bitcoin Price Will Reach $100k by 2021 – More Volatility Expected

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Ahsan Khalid

Blockchain Developer. An Electrical Engineer with majors in software development. I present forward my insight regarding the latest happenings of the blockchain world. All views on my articles are my own. Email: ahsan@blockpublisher.com or editor.news@blockpublisher.com

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