Will Bitcoin halving bring about an increase? Let’s see what the industry says

Every four years, the block reward that Bitcoin miners can receive is reduced by half, which is called the "halving event". The last halving took place in July 2016, and the next halving is expected to take place in May 2020. According to calculations by Bitcoinblockhalf.com, there are 141 days left until the next halving. Although the price of Bitcoin has been fluctuating sideways recently without any major ups and downs, some people in the community believe that the halving may cause its price to soar, but some people also believe that the results of this halving may be "unexpected". Now that the date of the halving is getting closer, the community is once again hotly discussing this topic.

Image source: bitcoinblockhalf.com

Viewpoint 1: Halving will bring more infrastructure and more purchases

Speaking of expectations for the halving, Spencer Bogart, general partner of Blockchain Capital, revealed in a recent interview that he was at a loss about the matter, because he said: "In the truest sense, there is no risk-free return in this industry"; in this sense, he himself is 100% priced in. Many people are convinced that the price of Bitcoin will soar after the halving. Bogart believes that this is a very nuanced idea. He said that there are two main factors that should be taken into account,

“One is that the halving represents some kind of deflation, right? The natural convergence point for capital is on the sidelines, interested in allocating bitcoin. So you know, there’s a lot of capital that’s in that position today.”

Bogart revealed that they conduct a survey every 18 months and found that 27% of respondents (33% of those aged 18 to 34) said they are likely to buy Bitcoin in the next five years. He pointed out that people are considering buying Bitcoin on the sidelines. He added,

“But all of a sudden, when people start talking about cutting new issuance in half, that drives more buying and a virtuous cycle that really drives the bitcoin market, where higher prices drive more infrastructure, more computing power and network security, better liquidity, all of which leads to higher prices.”

Viewpoint 2: There is no direct and clear relationship between halving and price increase

On December 23, crypto media LongHash published an article titled "How Bitcoin's Halving Leads to Mining Accidents" stating that due to the general expectation that Bitcoin's halving will drive up prices, many people have joined the mining industry and purchased mining equipment to mine, which has led to a continuous increase in Bitcoin's computing power. However, according to historical records, there is no direct and clear correlation between Bitcoin prices and halving. The continued growth in computing power has increased the mining costs of miners, and there is no reason to believe that the increased mining costs will push up prices. Prices are determined by supply and demand. If demand is low, prices are likely to fall regardless of the mining costs. As computing power continues to rise, miners' rewards will be halved again, and miners are under pressure, and this pressure will also bring pressure to mining machine manufacturers. Given that top miners such as Bitmain and Canaan Creative are facing difficulties, if the market does not appear as expected, it is likely to put tremendous pressure on the entire Bitcoin mining industry, and even unprecedented "mining accidents" may occur.

Source: LongHash

Viewpoint 3: I don’t believe that super mining accidents will happen. Every halving is worth looking forward to.

On December 23, Jianliang Shao, CEO of Canaan Blockchain, said in a program that he did not believe in the occurrence of super mining accidents. He believed that this must be a game between some smart miners and some miners without perseverance. This process repeats itself, and similar rotations are staged every time. But there will be unexpected situations every time. It is worth looking forward to every halving. At the same time, Jianliang Shao also mentioned that Bitcoin mining is actually the process of buying Bitcoin at cost price. Non-compliance is a phased product, not forever.

Viewpoint 4: BTC price may not rise after halving, and there is no direction before halving

Meltem Demirors, CTO of Coinshares, recently sent out several tweets saying that there is a high probability that the price of BTC will not rise after the halving. For the first time, a strong derivatives (futures, options) market has emerged for Bitcoin. Most companies that want to speculate on Bitcoin will trade a derivative rather than Bitcoin itself. A theme of other commodity market research is how to price. Bitcoin can be said to be a digital commodity. Normally, producers determine the price of commodities. When derivatives take off, producers lose the right to set prices. Take the changes in the oil market over the past 20 years as an example. Derivatives have dominated trading. Most companies speculate on oil prices by trading paper contracts, and the market is driven by speculation. The more Bitcoin becomes an investable asset, the more the price decouples from its value and supply and demand. Bitcoin has become another stagnant pool in the global speculative game. It has become "financialized" and has become related to the macro market. Today, the Bitcoin derivatives market is still small, but it will grow rapidly. People always talk about whether Bitcoin has been priced. The difference with the Bitcoin halving (in May 2020) is that before the halving, the crypto market has no direction.

She further explained that previously people could only go long on Bitcoin "fundamentally," but now derivatives markets including CME and Bakkt are strong. Therefore, traders are given more options for derivatives trading. Demirors also emphasized that while the price reaction may be different this time, one fundamental factor will remain the same, which is the reduction in Bitcoin production. She even pointed out that demand for cryptocurrencies is growing considering trading activities from Square's Cash App, Grayscale's products, and more.

Viewpoint 5: Bitcoin halving is not expected to be optimistic, miners need to be prepared for risks

On November 21, F2Pool CMO Qingqing said in an interview that they were looking forward to it two months ago, but now the price of the currency has been on a downward trend, and they are not optimistic about the price rising in the first half of the year. If Bitcoin is halved, investors need to strengthen their risk awareness and prepare for the winter. If Bitcoin is halved, mining income will also be halved, Antminer S9 and Avalon A8 will be shut down, and some miners may be eliminated.

Viewpoint 6: Halving will not be immediately beneficial to Bitcoin

Cryptocurrency analyst and trading legend Peter Brandt believes that the upcoming Bitcoin halving will not be immediately positive for Bitcoin. He believes that the price of Bitcoin could reach $5,500 in July 2020. This price will mark the bottom of the long-term downtrend.

Viewpoint 7: 56% of respondents believe that Bitcoin halving will not affect the price

Morgan Creek co-founder Jason A. Williams recently tweeted that Grayscale released the results of the Bitcoin halving survey. 56% of people believe that the upcoming reduction in mining rewards will not be reflected in the price; 27% are sure that the market has already factored the event into the price; 17% are unsure. However, Pomp, another founder of Morgan Creek, previously stated that Bitcoin's halving in May 2020 will not have any impact on the price. It will be an insignificant matter.

Viewpoint 8: Halving will be the catalyst for the next Bitcoin bull run

Charles Hwang, managing member of the hedge fund Lightning Capital and part-time lecturer at Baruch College, wrote that by 2021, Bitcoin demand will stabilize at 633,000 BTC, while mining rewards will drop from the current 657,000 BTC per year to 328,500 BTC per year. This sudden shift in the supply curve is likely to be the catalyst for the next Bitcoin bull market.

Viewpoint 9: Bitcoin price may reach $100,000 after halving

Cryptocurrency enthusiast Crypto Einstein recently tweeted a chart showing how the price of Bitcoin has risen after each halving. In the chart, Crypto Einstein confirmed the time of a sharp rise in Bitcoin prices in December 2017, which is said to be related to the halving that occurred the previous year. According to the chart it released, after the halving next year, the price is expected to eventually reach $100,000, which would be the highest price level to date.

Opinion 10: Bitcoin price could drop to $4,500 before halving next May

Cryptocurrency analyst Tone Vays said that the price of Bitcoin could drop to $4,500 before the halving in May next year. He then added, “I can foresee that if the price of Bitcoin falls from $8,000 to $5,000, it may even reach $4,500, but return to $9,000 or more than $10,000 in a few weeks.”

Viewpoint 11: Bitcoin may be at the end of the big C wave or B wave

Some analysts believe that Bitcoin is currently in or will be in the big C wave. An analysis by Tradingview analyst imkeshav shows that the total market value of digital currencies is currently in the big C wave, and the lowest point may fall below the 2018 low (similarly, Bitcoin will also fall below the 2018 low). However, some analysts believe that this year's big B wave rebound trend is not yet complete. Weibo user "Lao Jiuhua" believes that there is still room above the big B wave rebound (which may be in line with the halving market in 2020), and the big C wave trend will start after the B wave rebound ends.