If there is one thing in crypto that appears to have some semblance of certainty, it is that when a coin faces a mining reward halving, it is expected to be a big event. This has been the case in the past with some of the major coins, and with Bitcoin heading to another rather important one, will it remain a noteworthy event?
When the morning reward of a coin, like Bitcoin, is halved, it is intended to lessen the circulating supply. This, in turn, makes the coin more scarce, and according to general macroeconomics, should make the demand rise, and the price moves up with it.
However, there are more factors that go into determining the price movement of an asset or commodity, and for Bitcoin, it is is a very different space as to when the last halving happened. In 2016, when the last halving took place, the price of Bitcoin did indeed take off.
In July 2016, when the halving happened, Bitcoin was hovering at between $600 and $700, then within the next 18 months, the price of Bitcoin soared to its highest ever point of $20,000. That being said, it was not purely driven by scarcity as Bitcoin also hit the mainstream.
Still, It would make sense that the halving certainly helped boost the price up when the mainstream adoption hit, but is this historical halving movement being too heavily leaned on with the upcoming May 2020 event?
Some, such as Blockstream’s Samson Mow, have taken to pinning his hopes on the halving to be the thing that leads to renewed price action. He said in a tweet, responding to infamous anti-Bitcoiner Nouriel Roubini:
“Bitcoin is down because we’re still in the phase where we mint 1,800 $BTC a day. At $9,000 price levels, $16.2 million a day is required to maintain a stable price. The upcoming halving will fix this. Weak hands can GTFO.”
However, more cautious voices are also arising as some feel that the event will be a ‘non-event.’
Jason Williams, co-founder at digital asset fund Morgan Creek Digital, said that unlike many others, he believed markets would not move as a result of the halving next May.
More so, in an article on Coindesk, Noelle Acheson, a veteran of company analysis and Coindesk’s Director of Research, spelled out her reasons why this halving may not be such a big deal.
“First, some argue that the halving is already priced in. The move from $3,300 to $12,000 earlier this year? That was it,” she explained, adding: “Second, models tend to fit until they don’t. The bitcoin ecosystem today is arguably very different from previous halvings: four years ago, crypto derivatives markets were in their infancy, institutional involvement was slim and valuation frameworks were practically non-existent. It’s not unreasonable for investors to believe that “this time it’s different.”