How Coronavirus pandemic is poking holes in anticipated post-halving Bitcoin rally?
|- Bitcoin mining rewards could be halved in less than 24 hours, greatly reducing the coin's supply.
- While past halving events have resulted in price rallies, the third halving taking place amid the Coronavirus pandemic.
Bitcoin is heading into its third halving in less than a day from the time of writing. Investors around the world are bracing themselves for a much-anticipated post-halving rally that is supposed to emanate from the expected reduced supply as demand stays the same. However, the ongoing Coronavirus pandemic presents unknown uncertainties that could jeopardize the bull-run that has been associated with similar events in the past.
While the past two halvings saw Bitcoin price rally massively, the third-halving is taking place in unusual times; COVID-19. According to Matt Weller, Head of Research at GAIN CAPITAL, “from an efficient market perspective, any fundamental reaction to the halving should be heavily priced in at this point.” Weller adds:
After all, it’s hard to imagine a more predictable event than an unalterable supply reduction that has been scheduled for more than a decade in a liquid, heavily-traded … asset.
The CEO of Binance, the leading cryptocurrency exchange by daily trading volume and number of users, Changpeng Zhao reckons that “historic events don’t necessarily predict future events, but there’s a psychological level to it as well.” Zhao continues to say that since “it will cost the miners almost double to produce bitcoin, they are not willing to sell when the price goes below the psychological level.”
The Coronavirus pandemic economic downturn according to Ryan Watkins, a research analyst with Messari, a blockchain data analysis platform is one factor that would hinder Bitcoin’s rally after halving. On the contrary, Jake Yocom-Piatt, co-founder at Decred, a cryptocurrency project says that halving is particularly going to impact Bitcoin positively.
A pandemic is very much a deflationary type event. Economic activity is going to take a real nosedive. The ‘halving’ of bitcoin is a necessarily deflationary action.
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