The “Bitcoin Halvening” Will Send the Price of Bitcoin to the Moon
A Rare Event Indeed
There’s a rare event that takes place in the Bitcoin eco-system that on both occasions in the past has seen major market growth. Every four years what is commonly known as the “Bitcoin halvening” takes place. The halvening is a 50 per cent cut (halving) in the minting of the finite cryptocurrency, and it is due to take place in May 2020.
In previous halvenings you could have made more than an astonishing 11,000% if you had invested before it happened in 2012. The 2016 event would have netted you more than 7000% profit if you had positioned yourself in time.
You see, there can never be more than 21 million bitcoins. The supply of Bitcoin is coded and because of its decentralised, immutable nature we know exactly how many there are now and how many there will be at any stage in the future.
Every 10 minutes there are 12.5 bitcoins minted and rewarded to miners who use their powerful computing power to compete against each other in hope of working out the complex maths behind the cryptographic algorithm that form the Bitcoin blockchain.
Investing Early Is Key
From May 2020, the amount minted will drop from 12.5 to 6.25 every 10 minutes, and the halvening event will keep occurring every four years until the very last bit of bitcoin is minted. And the best thing is: If past trends are anything to go by, you could a huge profit.
However, waiting until the halvening takes place isn’t the best of strategies as past trends have confirmed. Although there has been massive price increase after each cut in the issuance of Bitcoin, getting in about now is probably the best timing. In past halvenings, bull trends started slowly but surely about 15 months prior to the event.
This year has been no exception. In fact, after the lows of about $3400 on February 8th, Bitcoin has been on a steady climb (for cryptocurrency market) and has just passed $8000 as of May 14th and everything is pointing towards a repeat of past trends this coming year.
Now I’m not saying you should rush out to buy Bitcoin. It has been very bullish of late and it might go back down (I could be wrong about that), but I do believe it will, in the next 2 years, see some incredible rises.
How High Can Bitcoin's Price Actually Reach?
People might think, Bitcoin can’t keep rising. Surely $20,000 was way too much for a virtual currency? How much more can it grow? Are two questions I’m asked a lot. Well, let me tell you: Even when its market cap topped out at just under $20,000 per Bitcoin in December 2017, its market cap was tiny compared to other assets.
You see, Bitcoin is a deflationary currency. There can only ever be 21 million. There are now about 17 million bitcoins and the market cap is the full amount divided by however many there are minted. So when Bitcoin was at $20k, its market cap was about $325 billion.
If the creator of Bitcoin, Satoshi Nakamoto, had programmed it to be 21 billion instead, the price when its market cap was $325 billion would have been 1000x less than $20,000, which works out at a measly $20. Now that price wouldn’t put anybody off, I’m sure. So, really, the price per coin isn’t really a good indicator for value. Just now that Bitcoin’s market cap has a lot of room to grow.
Many people compare Bitcoin to gold. Virtual gold, it’s called by some, and like gold it has become a store of value, for now. If Bitcoin is like gold, its market cap is about 7000% less than gold’s. Some people might scoff and ask how it can be compared to gold. Gold is “real”; it’s been about for millennia, etc.
Of course this is true, but Bitcoin is like gold and in some ways it is much better. How much gold can you carry around the world? It gets quite heavy after a while, and customs will stop you and take it off you. With Bitcoin, you can take it anywhere you like.
How much does it cost a government to store gold and send gold to another government? A lot of time, security and money, for sure. With Bitcoin’s store of value, governments will be able to transfer that value they were going to send in gold, in Bitcoin instead. And it will take minutes, not months. That is so valuable in itself it’s difficult to quantify.
Institutions Love The Concept of Bitcoin
Nothing like Bitcoin has ever been created before. Nobody, not even the banking institutions has known how to deal with it, but many people and the banking world are coming round to it, and once there are regulations in place, I believe the institutions will start to try it out. Institutional money is in the multi trillions. Imagine if they invest just 5% of their portfolios in Bitcoin. I’ll let you do the maths my calculator doesn’t have that many zeroes.
All the big institutions are akready getting into the cryptocurrency space and building infrastructure and services for the future of the new asset. Intercontinental Exchange (ICE), who own Nasdaq among other major stock and commodity exchanges, are about to launch their own cryptocurrency exchange. Bakkt will handle cryptocurrency exchanges and also futures contract settled in Bitcoin. This will be a huge event for the Bitcoin market, because the futures contracts for Bitcoin that we have now are settled in USD. So, any futures settled in Bitcoin means those bitcoins will have to be taken off the market, which will result in more buying pressure on Bitcoin and ultimately a higher price.
Other financial giants, such as TD Ameritrade, JPMorgan, and Goldman Sachs to name just a few are spending millions of dollars, positioning themselves to benefit from the cryptocurrency boom that lies ahead. In fact, Goldman Sachs is behind the $400 million acquisition of Poloniex cryptocurrency exchange. Fidelity is about to launch their own cryptocurrency services for their customers. They will offer custody solution and it is this that has held big money entering the space.
Institutions need a custodian to rid the dangers of handling large amounts of assets. And at the moment, handling Bitcoin is tricky. One wrong letter in the address you’re sending it to and the Bitcoin has gone for good. So, Fidelity will offer services like that to institutions and its 30 million customers. They will take the danger of handling Bitcoin and cryptocurrencies away from the buyer, which is necessary for most institutions and people.
It’s all perfect timing. All the innovation in many top cryptocurrencies is impossible to put into one blog, but there is so much going on with some of the brightest minds on the planet. Institutional infrastructure being built to handle to swathe of new customers, and the best thing is the financial institutions themselves wanting to get in. Their FOMO will start the next bullish run and I believe that will go way beyond the next halvening.
We are 12 months away from that rare event, but I believe the time to invest is around now. If you choose to invest, don’t invest more than might keep you awake at night. The Bitcoin and Cryptocurrency market is very volatile. It’s a young and minute market compared to other traditional markets, so the price swings are much more animated than what investors are used to, so only invest a bit, and be patient. Good luck.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.