2020 Bitcoin Halving Will Produce Similar Results to 2012, 2016 According to PlanB’s S2F Model
- The third block reward halving is less than 10,000 blocks away
- Miners are already prepared for the upcoming halving in May 2020
- Bitcoin will stay around $10,000 only to slowly rise to the $100k model value but it won’t be an easy ride
Bitcoin price is back on the move, jumping above $9,110, recording 4.43% gains in the past 24 hours. The price is seeing much volatility as we near the reward halving. Now, only 67 days are left for the big day that will cut the mining reward from 12.5 BTC to 6.25 coins. This drastic cut in reward and inflation rate of bitcoin is now less than 10,000 blocks away.
Less than 10,000 blocks to go!
— Jimmy Song (송재준) (@jimmysong) March 3, 2020
What does history say?
If we take a look at history, the first halving occurred in Nov. 2012 when the mining reward was cut down for the first time to 25 bitcoin from 50 BTC. At that time, BTC price was trading at about $11 only to see a hike of over 10,200% in the next year.
Then the second halving happened in July 2016. But this time, the price didn’t react the right way rather kept on ranging. It wasn’t until the last few days of the year, that the price of bitcoin started climbing. Then in the next year, BTC made a new high at about $20,000 seeing a spike of over 2,800%.
And though bitcoin bulls and maximalists are expecting another dramatic rise, it’s hard to say how we will fare this time. At least, the immediate price action is expected to be bearish but next year could bring in some hard profits for the crypto community.
2020 is the new 2016, the best is yet to come guys…
— ₿lockstar Pluto (@PBlockstar) March 2, 2020
Miners Getting Ready
Already the market is seeing much activity, with the hash rate of the bitcoin network reaching an all-time high of about 136 quintillion hashes per second. In the past year, this computational power dedicated to the bitcoin network nearly tripled. The rising hash rate means the network is more secure than ever and highly unlikely to suffer a 51-percent attack.
With the halving coming up and block rewards ready to be reduced in half, miners are ramping up investments to capture as many BTC they can. Major players are also entering the bitcoin mining sector as we saw Peter Thiel-backed Layer 1 opening a massive mining facility in Texas. This also suggests that miners are bullish on bitcoin long term despite the 16% drop in the price last week.
With the rising hash rate and price taking a downward turn, the halving might also see the least efficient and permanent miners making an exit as they don't mine at a loss for an extended period of time.
But it might not be an easy ride
Recently, Galaxy Digital CEO Mike Novogratz said bitcoin could test its all-time high by halving.
This is also holding up nicely and shows how this particular part of the marketcycle is "sideways" and therefor both hard to buy and hard to hold.
Im writing these posts to show you, but also to remind my self not sell any. I actually added to my stack this Friday. pic.twitter.com/VIG2a6OZ8q
— Polar Hunt (@polar_hunt) March 1, 2020
Prominent analyst PlanB who projects bitcoin topping above $100,000 this bull market also pointed out the issue that says “2020 Bitcoin halving will not be an easy ride.” Last week, the analyst who uses stock-to-flow model to determine bitcoin’s value ticked the issues including US/Mnuchin: draconian anti-btc laws, Craig Wright: legal and patent FUD, Hacks: like 2016 halving (DAO, Bitfinex), MtGox and PlusToken selling narrative, Miner death spiral and futures FUD, and Forks as the potential factors that could negatively affect bitcoin.
So I think May 2020 #bitcoin halving will produce similar results (red dots) as 2012 and 2016 halving. Why? Co-integration! ELI5: S2F and btc price stay together. Look at the white dots (1 means btc price is exactly S2F model value), btc is above and below model value EVERY YEAR. pic.twitter.com/kfrejvrRA2
— PlanB (@100trillionUSD) March 4, 2020
However, he maintains that bitcoin will stay around $10,000 only to slowly rise to the $100k model value.