Altcoin News: 3 Scenarios of Market Behavior Under the Influence of Bitcoin Reward Reduction

June 21, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

Bitcoin is waiting for the next halving — laid down in the code by the creator of Satoshi Nakamoto, the procedure for reducing the reward for miners to control emissions.

As you may know, the reward is reduced with the release of every 210,000 blocks, or approximately once every four years. Bitcoin halving in 2020 will be the third in a row — this time the reward for adding blocks to the blockchain will be reduced from 12.5 BTC to 6.25 BTC.

Will Bitcoin grow against the background of this? While some analysts say that the effect of an event usually turns out to be blurred over time, which is why it is impossible to count on a rapid rise, others say that the holders of strategic positions somehow benefit by limiting the offer. Below are three of the currently voiced opinions.

PlanB: $55,000

The PlanB analyst builds his forecast based on the “stock/flow” (SF) ratio of Bitcoin coins — that is, the relationship between the current volume of cryptocurrency and its inflation. He describes his point of view in detail in a post on Medium.

According to PlanB, this ratio is now equal to 25 — a hypothetical doubling of the current Bitcoin emission of 17.7 million BTC would have taken 25 years if it were possible.

For comparison, gold has an SF of 62. In some cases, a high SF value corresponds to a high capitalization of an asset. After the halving, the SF value of Bitcoin will rise to 50, which will allow it to approach gold by this indicator. Based on these observations, the analyst concludes that after the halving, the Bitcoin market capitalization may exceed $1 trillion, and the asset price per unit would be $55,000.

Moon Overlord:?

Another pseudonymous analyst — Moon Overlord — back in January indicated that Bitcoin traditionally begins to grow about a year before the halving, and advised buying cryptocurrency in the remaining months, predicting the beginning of the rise in May. As it became known later, in his prediction he was quite close to the truth.

Moon Overlord does not name specific values but believes that the upcoming halving could serve as a catalyst for the uptrend that has emerged in recent months.

Image credit: Moon Overlord

Canaccord Genuity: $20,000

In May, analysts at Canaccord Genuity, an investment bank, published a note to their customers in May, suggesting that, against the background of a halving, Bitcoin could reach its historic maximum recorded in December 2017.

The authors of the note claim that they noticed a “striking similarity” of the behavior of the Bitcoin market in the periods 2011–2015 and 2015–2019.

“While this simple pattern recognition has little fundamental basis, we note that bitcoin does operate on a four-year cycle of sorts, as the halving of bitcoin’s mining reward occurs approximately every four years. Bitcoin has started to form the spring 2019 bottom we began mentioning last year, although a close look at the chart suggests the recovery may be slightly ahead of itself. Looking ahead, if bitcoin were to continue following the same trend, the implication is a slow climb back toward its all-time high of ~$20,000, theoretically reaching that level in March 2021,” they write.

Earlier, the approaching Litecoin Halving, some analysts called one of the reasons for the current rise in the price of cryptocurrency.

Author: Marko Vidrih