Many in the crypto space argue that halving triggers a price rally before and after it occurs. The community consensus is that bitcoin starts rallying six months before the event and it’s not just because the same has been seen with the past two halving events, some models have also come up to support this theory.
Bitcoin’s next halving will happen in less than 180 days from today, and it has already generated a lot of hype as the community waits to see how bitcoin’s price reacts to halving this time. However, since the bull run in June, Bitcoin has remained bearish and this trend could continue. According to one market analyst, the signs are there. This time, we might go into halving on a bearish note.
Bitcoin Tanks Below $8,200
On Monday, Bitcoin shed over $400 to test the $8,000 level. Although the price has recovered slightly to $8,146.45 at press time, further decline looks possible as the bears seem to have a tight grip on the market. Over the last seven days, bitcoin has dropped 6.6% of its value and is also down by 3.4% on the day at press time.
Other cryptocurrencies are also being clobbered hard. This month alone, the entire crypto market has dipped by around $40 billion, subsequently dampening the hopes of an end-year surge for the crypto assets. Moreover, this implies that more downside can be expected and bitcoin could soon test the prior support at $7,300.
Why Is Bitcoin Not Pumping Ahead Of Halving?
As aforementioned, Bitcoin’s third halving is barely six months away and the reduction in Bitcoin’s mining rewards has historically catalyzed a bull run both before and after each halving event. So, why is bitcoin not rallying now as it has done in the past?
Some crypto watchers suggest that the next halving in May 2020 is already priced in. They say the rise from $3,000 lows earlier in the year to around $14,000 in June was stockpiling in anticipation of the halving next year. However, Morgan Creek’s Anthony Pompliano recently opined that the next halving is not priced in.
But, for investor and leading analyst Willy Woo, bitcoin is not showing any signs of rallying ahead of the halving because the fundamentals are different this time. Woo recently studied the current downtrend in the Bitcoin market and noted that this is actually the first time Bitcoin is going into halving “in a bearish price action”.
He went ahead to explain that as bitcoin’s price plunges, weak miners unplug their equipment and this is exactly what happened in 2018 when Bitcoin slide from $6k to $3k. This year, bitcoin plummeted from almost $14k to sub-$8k and this action hugely affected miners who are already capitulating – ramping up the selling pressure in the market.
Woo claimed the scenario is quite “unique” this time and he doesn’t expect a repeat of the price action of the last two halving events. In short, bitcoin investors expecting a mammoth rally prior to halving may be in for a rude shock if Woo’s analysis is right. In fact, the short-term bias remains bearish for him.
Bull Run Post-Halving?
After block rewards are halved from 12.5 BTC to 6.5 BTC, it’s hard to imagine a bull rally will not ensue. Bitcoin’s inflation rate currently stands at 4% and this is way lower compared to that of fiat national currencies of at least 70 countries in the world, as mentioned by the Founder of Standpoint Research, Ronnie Moas. This rate will possibly drop below 2% after the reward halving event, making it a better store of value compared to fiat.
In a separate tweet, Moas asserted that he expects bitcoin’s price to double in the coming months while US stocks double in the next six or so years because the growth will be interrupted by a period of recession.
The jury’s still out on exactly how bitcoin will behave in the coming months before halving. But in the long-term, the halving scheduled for next year may lead to the price rising and breaking all-time highs.