Bitcoin’s next halving event (which happens every time 210,000 blocks of transactions are mined) is mere days away. It’s the biggest reason why at the time of this writing the price stands at more than $9,200 USD less than two months after plummeting all the way down to less than $4,000 USD on March 13, 2020.
Since the number of bitcoins produced each time a reward is handed out to miners is about to be cut from 12.5 bitcoins to just 6.25 bitcoins, the price is undoubtedly going to rise at least until the day of the halving.
While numerous countdown clocks exist, trying to pinpoint the exact time that the event will occur isn’t an exact science. It really depends how fast the network is able to process transactions in the quest to reach the 210,000th block. Most estimates have that happening sometime around May 11, 2020.
The bigger question is, what will happen after the halving event given that the price has more than doubled in just the last seven weeks?
Bitcoin’s brief but important history might give investors the answer.
Is The Third Halving A Charm?
The first time 210,000 blocks were mined on the Bitcoin blockchain was back in 2012. The price shot up from around $9.50 to $12.75 in November of that year. Just less than four years later, in July 2016, Bitcoin traded at nearly $660 per coin, which is roughly 45% more than the $440 it was trading at in May of the same year.
The difference the second time around is that Bitcoin actually reached a high of $780 per coin in mid-June before settling on the $660 number and stabilizing thereafter.
Halvings Don’t Always Equal Bull Runs
If there’s anything Bitcoin investors and gamblers have learned over the last 12 years it’s that it’s impossible to time the market and know exactly when to buy or sell. The 2016 halving event is proof of that. While the price of Bitcoin did skyrocket all the way to $780 per coin back then, it also plummeted back down to $465 just two weeks after the halving event. Predicting what will happen this time around is anybody’s guess.
The Difference Between Halvings Two and Three
One thing to consider is the fact that in 2016, the global economy was in much better shape than it is right now thanks to the coronavirus pandemic.
Businesses have been shut down around the globe for months and the overall number of coronavirus cases occurring worldwide is now exceeding a million people, much more than most global citizens and governments expected when the outbreak first occurred in China late last year.
While many posit that Bitcoin is a safe haven and a great alternative asset in comparison to many other forms of investment during uncertain economic times, that theory has yet to be proven. The price drop in March happened amid the global panic after all. So while some believe that Bitcoin’s $20,000 high at the end of 2017 is well within reach given the current economic conditions around the world, others think people might raise to pull money out of the cryptocurrency market.
Institutions May Prop Up The Price
Don’t be surprised if within the coming days Bitcoin’s price flirts with the $10,000 mark. Chicago’s Mercantile Exchange saw an extra $339 million pump into Bitcoin related funds. Many consider that to be the mark of what’s going on with institutional investment and how that’s impacting the price. Only time will tell if the price of Bitcoin is going to go well beyond that moving forward.