Bitcoin rises strongly to the heat of the ‘halving’ or reduction of the remuneration of miners, reminiscent of the bubble of 2017. At the same time, the forecasts for rises are reborn, some as astronomical as crazy.
The price of bitcoin is revalued 100% from the lows it touched in March after the coronavirus pandemic exploded and is starring in an epic comeback in the heat of the imminent ‘halving’.
The halving of miners’ pay, scheduled for May 12, is fueling a bullish move reminiscent in some ways of the buying fever that broke out in late 2017, bringing prices to $ 17,500.
In reality, “halving” is a technical event that occurs when 630,000 blocks are mined, which happens approximately every four years.
So miners receive just half bitcoins, making the digital currency a doubly scarce currency.
From this point of view, it is the most predictable phenomenon in the world, pure seasonality, but that does not prevent prices from heating up again, as has happened in the past.
What happened at previous halving events?
The first ‘halving’ took place in 2012, and a year after it happened, the price of bitcoin shot up more than 1000%, going from 12 to more than $ 1,000.
The second reduction in remuneration was in 2016, just before the big rally, although on that occasion, bitcoin was much better known to investors, who entered the new digital currency wholesale.
Such was the frenzy that by the end of 2017 the all-time highs were reached at $ 18,674. And from there, the unfolding and falling into hell, the puncture of what many described as one of the biggest bubbles in history.
But historically, bitcoin has bottomed 459 days before a ‘halving’ event, picking up as the markdown date approached, and subsequently exploding higher, according to a study by Pantera Capital reported by Bloomberg.
The figures say that in post-halving rallies, prices rose an average of about 446 days. So if history repeats itself, bitcoin should see its highs on August 21, 2021.
It remains to be seen whether this will be the case, which has not stopped crypto fans from launching their new price projections, in some cases truly crazy.
For example, Raoul Pal, CEO of the firm Global Macro Investors, said that prices could reach a million dollars in the next three to five years.
Well-known venture capital investor Tim Draper, who predicted that bitcoin could hit $ 250,000 in 2022 or the first quarter of 2023, was also pleased. He also hinted at the theory of monetary stimuli.
“Bitcoin adoption will spread because it is simply better than any of the other currencies that are tied to governments and their political whims,” Draper dispatched.
Halving is the emotional factor in this equation, an element that can help boost, but many observers more scientifically justify the bitcoin rally for strong liquidity injections approved by central banks to combat the coronavirus crisis.
In a world where the money supply of major currencies grows to infinity, theory says that the intrinsic value of that fiat money is shrinking.
For this reason, Pal assures that bitcoin “was born from a financial crisis exactly because of a crisis like the one to come, and that is the literal reason why it was invented.”
Jefferies Aimed At Halving
Some important brokers on Wall Street also signed up for the halving car, but making a little less noise. This is the case of Jefferies, who recommended his clients to buy bitcoin before the event.
Specifically, the analyst of the firm, Chris Wood, indicated that “halving should increase the upward pressure on the price”, assuming that the demand for the currency continues to grow. ”
In addition, he recalled one of the theories that could most logically drive the rally, that of scarcity. “To invest in Bitcoin you need to believe that the system has integrity, in the sense that supply is really limited,” Wood said.