You probably have heard of this analyst who said that Bitcoin would skyrocket to $100,000 within just the next 24 months. Yep, Bitcoin Macro tweeted his prediction, and it went viral instantly on many crypto news websites. Presumably, Bitcoin Macro made this prediction due to the expected BTC halving event that will occur in the middle of this year.
With this article, we will analyze how likely that prediction to happen. Let’s just begin right away!
The History Of Bitcoin Halvings
One of the reasons why some people are extremely bullish on Bitcoin is the upcoming halving event that will happen somewhere in the middle of the year. For your information, halving means Bitcoin mining reward halving. Bitcoin was programmed this way since the very beginning. Averagely, every four years, Bitcoin mining reward gets halved, due to the increased complexity. This system gives incentives to the long-term valuation of the coin.
And logically, when there are fewer mining rewards for the miners, there will be less Bitcoin dumps on the open market by the same miners. That means, the price can appreciate more as there will be less selling pressure. Many crypto speculators also created a self-fulfilling prophecy by believing that Bitcoin price would go up after the halving event, and thus they themselves buying more Bitcoin, and it was their action that helped to create the upward trend.
So, how about Bitcoin price history with the previous halvings? Let’s take a look. In the first halving event that occurred on November 28, 2012, Bitcoin price was trading around $12.22. And by December 2013, price went to above $1000 before it crashed afterward. This first halving successfully “halved” mining reward from 50 BTC every 10 minutes to 25 BTC.
How about the other halvings? Well, the second halving event occurred on July 9, 2016, where Bitcoin was trading around $657 at the time. And just like the previous halving, this time, the mining reward was halved from 25 BTC to 12.5 BTC every 10 minutes. Its impact on price was also similar. By December 2017 (the peak of crypto popularity), Bitcoin was trading above $19,000. That’s a huge increase from $657 to above $19,000.
What Will Happen With The Upcoming Halving Event?
The upcoming halving event that’s expected to happen mid-2020 will cut the mining reward from 12.5 BTC every 10 minutes to 6.25. Many analysts predict this third halving event would create another upward pressure, just like what happened with the previous two halvings. And considering there are more crypto traders nowadays than four years ago, it’s possible there would be more “self-fulfilling prophecy” moments this time, creating an even bigger upward pressure for Bitcoin price.
When Bitcoin Macro tweeted his $100,000 price prediction in the next 24 months, most likely he was talking about the potential impact of halving for 2021’s Bitcoin price. And if the past is used as the indicator for future price action, it is likely that we will achieve $100,000 before the end of 2021.
In the world of cryptocurrencies, fortunately (or unfortunately), people often follow what whales are doing. So, if whales (traders with huge money) believe it’s time to pump Bitcoin, everybody else might follow, and jump into Bitcoin, creating a snowball effect. When everybody else buys the same thing, it is actually possible for Bitcoin to keep breaking new high.
However, keep in mind that nothing is certain. While the third halving event can create the same bull run like the previous ones, but it is actually possible the upward pressure would be different this time. Some people have warned traders not to be over-optimistic. Bitmain’s Jihan Wu stated that 2020’s halving might not spark another bull run.
And if this halving would not give as much upward pressure on Bitcoin price as the previous events, there is actually a good chance whales will decide to dump Bitcoin instead of just “waiting.” When it happens, everybody else will follow the actions of the whales, and BTC price might actually go down.
Where We Are Right Now
When this post was written, Bitcoin was trading around $8,885. After the crypto winter in 2018, Bitcoin was having a generally good year in 2019. It kept going up from below $4000 to above $12000 before finally it bounced back to under $8000. In January 2020, so far, Bitcoin has been pumping from around $7,000 to $8,885. It looks like some traders have anticipated the upcoming halving event very early.
The analyst who said Bitcoin will skyrocket to $100,000 in 24 months might not be wrong. It’s actually possible looking at the percentage of ROI that was created by the previous halving in 2016. However, just like all the other volatile assets out there, nothing is certain. While you can use past history to predict the future, but we can also say that history does not always repeat itself. Sometimes, it goes the exact opposite of what people expect. So, always trade cautiously!