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Bitcoin Price Outlook After Historic Halving

Bitcoin Price Outlook After Historic Halving

At exactly 3:26 PM EST on May 11, the Bitcoin network has successfully executed its third halving. While the repercussions of the event have been underwhelming to some, the world remains anticipative of its influence on the overall dominance of Bitcoin in the future.

To add fuel to the fire, many cryptocurrency miners have been offloading more BTC. This is due to the spike of mining difficulty months after the May 11 halving. This has been going on for months, with a possibility for the mining difficulty to reach an all-time high soon.

This is an integral part of the network’s design to maintain the price of the crypto asset. More so, leading to an increase in its value as more people and payment services accept the coin. As far as the charts are concerned, the plan is working like a charm.

In this article, we take a careful look at the BTC price after its halving. But first, let us make sure that everyone’s on the same page by discussing what is Bitcoin halving.

What is Bitcoin halving?

Bitcoin halving is the phenomenon wherein rewards earned by those who discover new blocks that are added to the Bitcoin blockchain are cut in half. In other words, crypto miners get only 50% of the BTC rewards that they would mine before the said event.

Bitcoin creator Satoshi Nakamoto pre-designed this phenomenon to prevent an oversupply of bitcoins, thereby inducing inflation. Other popular cryptocurrencies like Litecoin also have their own halvings.

Before the third halving occurred, miners were able to share a block reward of 12.5 bitcoin roughly every ten minutes. Now, they will have to be content with 6.25 bitcoins for every new block that is discovered and added to the blockchain.

Aside from this, the network adjusts its mining difficulty depending on the hash rate. If it detects a higher hash rate, then its difficulty increases, as is evident after the halving.

Read Also: What You Need to Know About Bitcoin Mining Difficulty’s New Record-Highs

Bitcoin price after halving

At the time of writing, Bitcoin is trading at $11,719 per piece. Contrary to expectations, it has remained quite stable despite cryptocurrency’s volatile nature. Since the halving, it was able to maintain a steady increase to its current price range.

6-month Bitcoin SMA and EMA. (Source: MarketWatch)
6-month Bitcoin SMA and EMA. (Source: MarketWatch)

As the chart reveals, Bitcoin is on track to maintain its $11,000 price range. Even though there seems to be a resistance level at $12,000. To the Bitcoin bulls’ relief, there is enough support in various $11k levels — $11,400-$11,600 — to test the $12k resistance again and again.

Prior to the 5-digit breakout in late July, Bitcoin struggled to maintain its footing at the $10,000 level. It was only able to break the $10,000 barrier on June 2. It had to wait until July 26 to 27 to finally gain as much support that it needs for it to reach $11,000 as well.

As if these were not enough cause for celebration, the Hash Ribbon indicator proves that this is a sustainable rally. This is evident with the amount of small-time miners admitting to unbearable mining difficulty, hence the offloading of their BTC reserves.

Once all of the smaller miners capitulate their BTC, the more-able miners will dominate the market even more.

Bullish outlooks

Many analysts are optimistic that Bitcoin will have its bull run following the halving. History has shown the best rallies that Bitcoin had were after the halvings. For instance, the July 2016 halving caused Bitcoin to rally to up to a whopping $20,000 in December 2017.

If history repeats itself for the third time, then Bitcoin must sustain a rally for a significant amount of time. But this will take time; the last bull run took at least a year to build up hype and support.

However, many also believe that Bitcoin’s failure to sustain its $12,000 breakout shows lack of support, which might eventually cause it to lose its footing in the $11,000 territory. The $12,000 resistance level is very crucial, and BTC has to turn it into support if it wants to sustain its rally.

Some went as far as to suggest that BTC will undergo a correction. Probably as a result of miners’ capitulation and the dying down of the halving hype.

For example, Ethereum godfather Vitalik Buterin expressed strong disagreement with an anonymous quantitative analyst named PlanB, who showed the stock-to-flow (S2F) model.

According to the S2F model, Bitcoin will skyrocket to $288,000 come 2024. Vitalik disagreed, saying that the theory that halvings cause Bitcoin to rise is unfalsifiable. In other words, the Ethereum godfather claims that the model cannot be proven or unproven.

PlanB commented on the tweet, saying that “halvings make BTC scarcer (in S2F terms) and scarce assets  (BTC, gold, silver etc) seem to have a higher value than non scarce assets.”

The anonymous quant pointed out that “it is not so much about the peaks (those are caused by greed and fomo), but the average price levels.” Moreover, he said in another tweet that Bitcoin’s post-halving price began to align with the 2016-2017 bull run.

Macro perspectives

What PlanB is asserting, along with many other Bitcoin bulls, is that the decrease in the supply of newly-minted BTC will inadvertently cause its price to rise, especially once the demand for BTC has increased.

Surprisingly, a lot of investors still trust Bitcoin as an investment asset, especially in the current economic situation. In fact, Robert Kiyosaki, the author of the phenomenal book Rich Dad, Poor Dad,recently admitted that he is currently investing in gold, silver, and bitcoin.

Kiyosaki said,

I think it’s important, especially for old guys like me, to understand the crypto world because that’s the world that’s coming into view right now and us real estate and gold guys are being phased out.

If history indeed repeats itself, then we can expect Bitcoin to start rallying after almost a year. The upcoming bull run would even surpass $20,000 given the significant decrease in the production of newer bitcoins.

Jesus is the Senior Editor of CoinQuora. He's been following the crypto space since 2016, and may possibly do so indefinitely. He covers various blockchain-based developments and crypto market trends.