US, WASHINGTON (ORDO NEWS) — Bitcoin is once again returning lost ground, and cryptanalysts are hoping for a new growth catalyst – halving the first cryptocurrency.
Halving is a process when the reward of miners for block mining decreases, that is, the speed of generating tokens slows down, and miners receive half the cryptocurrency. This is such a feature of bitcoin – halving occurs approximately every 4 years. This process is necessary to control cryptocurrency inflation, the amount of which is limited to 21 million tokens. Currently, 18.3 million, or 87% of the total possible number of bitcoins, have been mined.
In the near future, the third bitcoin halving is expected. During the first slowdown in block generation in 2012, bitcoin was worth $ 12, during the second halving in 2016, the price of the first cryptocurrency was $ 650. Now the cost of one bitcoin is about $ 8700.
As bitcoin generation is halved and demand remains the same, the price should rise. However, the upcoming halving of Bitcoin caused an ambiguous reaction from the crypto community. While many traders stockpile a coin whose expected deficit is expected after the event, it is still unclear in which direction its price will move after May 12th.
Skeptics argue that cryptocurrency prices are notorious for volatility and are often difficult to explain, arguing that any increase in value should be estimated in advance, but cryptocurrency fans cite a historical precedent.
The frenzy around digital currencies once led Bitcoin to a value of almost $ 20,000, while the coin is still trading about 50% below the 2017 record. The average rally time after halving was 446 days: if the story repeats itself, Bitcoin may peak in the region of August 2021.
The expected reduction in supply will be 40% more than in 2016, said Dan Morehead, CEO of Pantera Capital cryptocurrency hedge fund, analyzing previous halvings. He added that the price of cryptocurrencies above $ 100 thousand may seem absurd. Morehead emphasized that the $ 5,000 exchange rate also seemed unrealistic when his company issued a forecast at an asset price of $ 65.
Cryptocurrency wallets also accelerated by 2% in April, which is the largest monthly increase since at least November. Experts see two possible explanations: bored gamblers turn to cryptocurrencies during the quarantine period, while many others spur Bitcoin’s halving expectations.
Of course, many cryptocurrency fans as a catalyst for price increases also point to unprecedented fiscal stimulus from central banks around the world. Real Vision economist and CEO Raoul Pal believes that bitcoin will go up to $ 1 million in 5 years and become the future of the financial system. Despite the fact that halving is not a key factor in its forecast, this process can become a potential driver. Over the same period, the cost of gold will increase 5 times, the entrepreneur believes. According to him, in this case, the capitalization of the precious metal will increase to $ 15 trillion, and its digital competitor – up to $ 10 trillion.
Morgan Creek Digital co-founder Anthony Pompliano suggested that bitcoin would rise in price to at least $ 100,000 by the end of 2021. Both halving and the additional issue of money by the Central Bank of different countries will help this, which will force investors to transfer capital to assets protected against inflation.
Jefferies LLC analyst Christopher Wood, in his weekly Greed & Fear newsletter, recommended that investors, including institutions, buy bitcoin before halving, citing previous token price spikes during similar events. “To invest in bitcoin, you must believe in the integrity of the system in the sense that the offer is really limited,” he wrote. A digital token should be a source of diversification “precisely because it is truly decentralized,” he said.
A number of crypto exchanges have also begun to additionally hire employees. Kraken LLC and Binance Holdings Ltd. expand their staff, as well as OkEx and Coinbase Inc.
David Yanchevsky, CEO and founder of Coincover, said that any event on the market that affects the adoption of cryptocurrencies is positive for his business. “When the last surge of growth occurred, a lot of people entered the market because they felt they had to participate in the action,” said Yanchevsky, whose company offers insurance against theft of cryptocurrency and fraud. “Ultimately, everything that makes the market or wider investment organizations keep abreast of the situation in the cryptocurrency market has a tendency to positively influence the development of the industry.”
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