German bank BayernLB predicted last year that bitcoin’s halving could drive its price to $90,000, roughly 12 times the current level.
Bitcoin’s (BTC) upcoming halving – a once-every-four-years reduction in the supply of new units of the cryptocurrency – has got traders, analysts and gawkers abuzz over the potential price impact.
Blockchains like the ones powering bitcoin and bitcoin cash rely on high-speed computer operators and data centers known as “miners,” which collectively process quintillions of computations per second in an effort to maintain and protect the security and integrity of the network. To keep the miners affixed over the long term, according to Ver, “the price only has to double once every four years.”
“I’ve always said that the price is the least interesting thing about cryptocurrencies,” Ver said. “The price is just a side effect of the amount of adoption you’re getting in the world.”
Four years is quite a span – enough to frustrate investors, analysts and researchers who might prefer to clearly quantify the price impact of past halvings, or of the upcoming halving.
Just think back to how much has happened in cryptocurrency markets in the past six months: Chinese President Xi Jinping said the world’s largest economy would “seize the opportunities” afforded by blockchain technology. (Bitcoin jumped 12 percent.) The U.S. killed a top Iranian general, threatening to escalate into a war. (Up 10 percent.) The coronavirus came along. (Bitcoin plunged, then recovered, and is now up 2 percent year-to-date.)
Blockware Solutions, which brokers high-speed computers used for cryptocurrency mining, wrote Wednesday in an e-mail that price is “not just supply side economics,” but demand.
“Bitcoin has the most robust ecosystem in the blockchain industry, and the fundamentals continuously improve due to the global macro improving sentiment and accelerating demand,” according to the note. The point was that bitcoin watchers shouldn’t draw too many conclusions from bitcoin cash’s halving.
Rich Rosenblum, a former managing director of Wall Street firm Goldman Sachs who now oversees markets at the digital-asset trading firm GSR, noted bitcoin cash prices usually trade in sync with bitcoin’s – similar to the way gold and silver prices track, as do oil and gasoline.
“The bitcoin halving in a month is going to have more impact on bitcoin cash than the bitcoin cash halving,” he said in a phone interview.
Bitcoin cash’s halving took place at 12:19 UTC, when the blockchain network reached block number 630,000. The most immediate impact was also, perhaps, the most visible: The next data block took nearly two hours to close, well beyond the average of about 10 minutes.
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BTC: Price: $7,327 (BPI) | 24-Hr High: $7,399 | 24-Hr Low: $7,210
Trend: Bitcoin has found acceptance above the three-day 200-candle average and looks set to extend the ongoing rally toward $8,000. That would bring prices back to a level seen ahead of the massive sell-off on March 12.
The cryptocurrency is changing hands near $7,312 at press time, while the long-term average is now located at $7,093. As seen on the three-day chart, the bulls repeatedly failed to keep gains above the crucial average in the three weeks to April 5, before flipping the hurdle into support during in the last few days.
The breakout may prompt more buyers to join the market, leading to stronger price gains. Supporting the bullish case is the three-day chart MACD histogram’s crossover above zero, a confirmation of bearish-to-bullish trend change.
The bullish case would be neutralized if the spot price drops below $7,050, violating the ascending trendline connecting the March 13 and March 30 lows.