Digital Assets: Its Halving in 2020 Could Boost Bitcoin to $50,000

December 12, 2019 | Digital Assets, News
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Bitcoin’s halving in April/May 2020 could trigger a bull run in the cryptocurrency.

At least two analysts say that bitcoin’s halving in 2020 could eventually lead to prices in the range of $ 50,000.

A post in Medium by author PlanB analyses bitcoin’s value amidst its scarcity in the context of the halving event in 2020. The article concludes:

  • Bitcoin is a digital object with scarcity such as silver and gold
  • There is a statistically significant relationship between its “stock-to-flow” and market value
  • After its next halving in May 2020, bitcoin could have a market value of $ 1 trillion. That would be equivalent to a bitcoin price of $ 55,000.

Another post in Medium is written by Charles Hwang, managing member of the hedge fund Lightning Capital and an adjunct professor at Baruch College. His thesis is that bitcoin’s halving will result in a downward shift in its supply. On the other hand, historical trends point to stable or increasing demand.

Scarcity the key to bitcoin’s pricing

Hwang’s view, again, points to the increasing scarcity value of the digital currency post-halving.

He likens the bitcoin halving to the oil embargo event that occurred between October 1973 and March 1974. Hwang says: “This demonstrated an event where the demand stayed constant or possibly increased while the supply curve shifted and decreased. This led to a permanent increase in oil prices.”

Hwang makes the point that in the past, both bitcoin halvings had a similar impact on its price.

He points out that after the first event in November 2012, when the bitcoin price was $ 11, the high price after the halving was $ 1200. However, the low price was $ 200.

Again after the second event in July 2016, when bitcoin was at $ 600, the new high price was $ 20,000. However, its new low was $ 3300.

One can observe, therefore, that after each halving bitcoin touched a much higher-high and a much higher-low.

“This sudden shift in the supply curve will most likely be the catalyst for the next bitcoin bull run,” Hwang writes.

That’s because mining rewards will drop to 328,500 bitcoin annually from the current 657,000 a year after the halving.

Hwang is bullish on the demand side of bitcoin, too. He points to additional demand due to factors such as dark markets, the advent of ETF’s, demand from sovereign wealth funds, hoarding by wealthy individuals and global demand through localbitcoins.com (a peer-to-peer trading exchange). These factors he estimates would aggregate 633,000 bitcoins for 2021.

Add to that additional factors such as trading on leverage and simplification of systems. These could trigger additional unquantifiable demand for bitcoin.

Hwang, therefore, predicts that bitcoin’s price, on the low side, would range between $ 20,000 and $ 50,000 after its 2020 halving as shown below:

[Related Story:    Why McAfee Expects Bitcoin to Touch $1 Million by 2020        ]

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