The biggest event in Bitcoin this year won’t be some company accepting it or a regulatory move.
The Great Halvening
It will be the halving that takes place in May, which is expected to greatly reduce the supply, and therefore increase the price, of new BTC coming into the market.
One analyst predicts that Bitcoin will push its way to $16,000 by June. That’s roughly double the price we have today, and it’s a bullish prediction.
Bitcoin’s current price is dictated very much by a few large and glaring factors, including what miners are willing to sell newly minted coins for.
My guess, Bitcoin @ 16000 by June
— CryptoWolf (@IamCryptoWolf) January 19, 2020
While there’s every reason to suspect the demand for Bitcoin will increase in relation to its reduced supply of new coins, it’s not necessarily a guarantee that Bitcoin will rise to such heights.
After all, in the 2016 halving event, after 150 days, the price had only risen around $150. It wasn’t until the beginning of 2017 that the price of Bitcoin once again went past $1,000, and from there it went all the way to $20,000 that year.
Why Bitcoin Is King
Bitcoin inflation is a relative mechanism. Relative to many things, not the least of which is the portion of users who have no intent of using the cryptocurrency. The greater the number of “hodlers,” the greater the value of the coins that do circulate, depending on the demand in the market.
Demand and liquidity are two factors that Bitcoin has over many cryptocurrencies. Nevertheless, as John McAfee says, Bitcoin may not be the future. Building a massive infrastructure for the dinosaur in the room may not be the way forward. Bitcoin lacks many of the crucial factors that will determine the cryptocurrencies people pick in the future.
Bitcoin has the most name recognition. But at present, it doesn’t support the most transactions, and it’s not even the most regulatory friendly. Bitcoin isn’t the most private. It’s not the fastest. At this point, it’s not even the most convenient to use.
What Bitcoin lacks in all of those factors, it has in spades in things like liquidity, demand, name recognition, and functional utility. More than any other cryptocurrency, having Bitcoin puts you above most financial hurdles, as you can cash it out virtually everywhere, even places like Iran.
From one view, if Bitcoin demand simply stays the same, but the supply of new coins cuts in half, then the price should at least double. That’s one way to look at the factors, but looking at the past, there’s no reason to accept this logic, nor the logic that the price will magically hit $16,000 by June.
Also, just because something isn’t factored into a chart doesn’t mean that it will influence the chart in such a way. In short, there’s no reason to expect a massive price rise based on any factors we have available today. If we go off of previous data, something like $10 or $12,000 would be a more reasonable expectation as a result of the upcoming halvening.
