Bitcoin remains the most important cryptocurrency, so most people are looking forward to the expected Bitcoin Halving, which is expected in May 2020. Because of the halving in 2016, bitcoin saw a massive growth. So is there a chance, that bitcoin will skyrocket this year again – let’s have a look.
Why is the Bitcoin Halving 2020 such an important event?
Bitcoin is a deflationary currency. Therefore fewer bitcoins will be made over time – in the future the supply of new coins may even stop. But being honest, most of us won’t see this event happening, since it’s expected taking place in 2140. Nonetheless, the total supply of BTC is limited to 21 million coins. The underlying algorithm takes care that no more coins are created. Until then miners are validating new transactions and therefor are receiving block rewards.
In comparison to traditional fiat currencies this is a huge difference because they use an inflationary model. This means, that the central banks can emit new money for controlling the financial system. The deflation makes bitcoin a scarce currency, so the value grows over a longer period of time. Basically the more scarce an asset, the more valuable it is for investors.
Last Bitcoin Halving produced a massive growth
The next Bitcoin Halving will take place on May 20th 2020. It will be the third time, that the block reward of the most known blockchain will be halved. As a consequence, miners will earn 50 percent less BTC for every generated block. Experts are expecting, that this development could change the value of bitcoin.
In the past, each of these events boosted the bitcoins market valuation by more than a thousand percent. Because of this development, the awareness of cryptocurrencies has grown. Still, not a lot of people are talking about BTC and the upcoming halving.
The last halving took place in July 2016, where BTC was worth USD 600. Looking back, we can say that this last halving was the start of the great bull run of 2017. In that bull run BTCs price exploded and marked a new all-time high at USD 19,783,06.
Should investors buy bitcoin in 2020?
So, should investors buy bitcoin in 2020? According to us, the most interesting development regarding the upcoming halving will be the development of the bitcoin price. If the halving will have the same impact as in the past, we may see a new all-time high in 2021. It’s even possible that bitcoin could hit a new all-time high at 10 times its current valuation.
Even the Kraken CEO, Jesse Powell seems to be optimistic about bitcoin hitting the USD 100,000 after the halving. According to Powell, bitcoin will reach either a USD 100k or USD 1m price tag.
“When I hear people talking about a bitcoin “correction” I’m thinking USD 100k, maybe USD 1m. That’s what’s correct.”
Also, Anthony Pompliano, co-founder of Morgan Creek Digital Assets, believes that bitcoin could reach USD 100,000 by 2021. According to Pomp the “Supply-Demand economics remain valid. They are a great way to determine the market price. So, if the demand for a fixed-supply asset increases, we continue to see price appreciation.”
According to Pomp, the upcoming halving will be one of the reasons why the valuation of BTC will see new heights. So as a result of the positive forecast, we think that investors should buy bitcoin to participate of the upcoming development.