The long-awaited moment for the bitcoin network is here and the process that so far happened only two times just got another edition. As expected, the amount of media and community attention to the moment when the reward for each mined block of the bitcoin blockchain goes down by 50 percent is going through the roof.
While the bitcoin network, as well as most other cryptocurrencies, got its share of public attention in the previous couple of months – especially with the COVID-19 coronavirus pandemic – halving is still a unique and special event. This year, the presence of the unusual and far-reaching pandemic circumstances did not dampen the amount of attention. Instead, the complete opposite happened and the 2020 bitcoin halving got more informational space than either the 2012 or the 2016 halvings.
Now, the event took place as expected and the network took it undramatically. In other words, it all went according to the plan that is now over a decade-long. However, like it always happens, the discussion and projections only kick-off once the halving process is done. With 2020 halving behind the network and bitcoin and its BTC price stepping into their new chapter, what can be expected from the crypto domain in general and especially its biggest single cryptocurrency representative?
Anticipation and History
Like the previous two times, bitcoin halving is a much-anticipated process that was the talk of the crypto town for months beforehand. In theory, as well as the history so far, the value of the cryptocurrency tokens from this network should steadily rise. The simplest reason for this is that the new bitcoin tokens are now harder and thus more expensive to produce.
The bull runs of the previous years showcase the same trend. Both were started in the halving years, even though they took more than a year to fully develop their peak prices. In the wake of the first halving, bitcoin needed about 12 months to hit 90 times its initial value of about 10 USD. That bull run ended with bitcoin peaking at around 1,180 USD. This process was cut short with the disaster of Mt. Go, which was the first major shakeup of the cryptocurrency network. At that moment, it seemed like the bitcoin tale could meet a tragic end with so many investors and traders shaken by the impact of the attack on just one exchange business.
However, bitcoin also showed first signs of an amazing resilience back then and the network overcame the controversy and fallout around Mt. Gox. The second halving took place four years later and that bull run came in two phases. First, take the price of a BTC token from about 600 USD to 2,800 USD in less than 12 months. However, this opened up the road to the eventual highs of near 20,000 USD in December 2017. Thanks to this, it is clear just how high the anticipation is this time around.
In spite of the past precedents, there is no consensus where the market is going next in 2020. A big factor in that calculation is the overall state of the world in the wake of the COVID-19 coronavirus pandemic which is a huge influence on any economic and financial undertaking or system at large. This is something that impacts everything from traditional markets to esports in-game economies and cryptocurrencies. However, the analysts agree that the crypto markets, especially bitcoin, possess a new level of maturity that has not been present in either 2012 or 2016.
Firstly, bitcoin now has many derivatives, including BTC futures, as well as many additional options. This is influencing the field with the more advanced price discovery shared among numerous market participants. The same also influences the ability of a unified narrative that shows that the supply-squeeze will surely trigger a rally. Today, that notion is not as simple or straightforward as it might have been on the previous two occasions, even though (or precisely because) the domain as a whole is much more stable.
HODL and Halving
Like always, there is a prevailing sense that the ability to buy bitcoin and hold it for a prolonged period of time, the so-called HODL option, is once again the winning move. With volatility present in huge amounts, even for the otherwise very unstable crypto market, there is an absolute certainty that the prices will be all over the place. This applies to both short-term and medium-term projections, especially on the account of the completely unknown future of the global economy. When it comes to the pandemic, there is a consensus that a vaccine for the novel coronavirus will take at least a year or around that time period to be developed.
This means that going back to the old patterns of global behavior could be seen in Q3 of 2021. This is an unprecedented situation of the global economic showdown, so there is no way of knowing how the industries and financial institutions would take that. Thanks to this, the BTC price will oscillate wildly, which was already demonstrated in March and April. This is why anyone willing and able to keep hold of their crypto funds, especially BTC and ETH, will likely be able to make a profit at some future point, barring a total economic meltdown (which could also see BTC jump up in price).
Rapid Sequence of Innovation
One thing is also certain in the post-2020 halving ecosystem – price discovery and the potential of a new bull run will also be defined by the accessibility and introduction of innovations. In 2017, one of the biggest stepping stones for the development of that astronomical rise in BTC price was the introduction of bitcoin futures.
CME and CBOE bitcoin futures managed to play a huge role in the confidence level of the entire community of not just die-hard supporters of bitcoin, but also those who have been eyeing the cryptocurrency for its potential to make a quick profit. This included even traders who bet against bitcoin, but still added to the legitimacy of the entire domain. Something of a similar nature is needed in 2020 to capitalize on the possible gains and the definite promotion that the cryptocurrency like bitcoin gets from every halving event.