We are just 105 days away now from the Bitcoin reward halving event. The event the crypto community is eagerly awaiting for which will cut the yearly production of Bitcoin in half, decreasing the reward from 12.5 BTC to 6.225 coins per block.
As we fast approach the halving, the searches for the bitcoin halving on Google Trends have started climbing as well.
As we can see, the biggest uptrend came during the last halving and a comparatively very small but noticeable bump came when BTC made a new all-time high in December 2017. But a clear uptrend can now be seen in the Google searches yet again.
Halving Price In or Not?
While people's interest has re-emerged in halving, so has in the discussion whether this event is already priced in or not.
Economist and trader Alex Kruger, argues that the whole idea of trying to guess that “makes no sense,” because “the date is too far off for the market to have any clarity about it,” though it is bullish in the long term.
The halving is not just a "news event" and should not be treated as such.
900 less BTC hitting the market EVERY SINGLE DAY over the next 4 years.
It simply can't get priced in before it happens.
Analyst Bob Loukas is also “very bullish” on BTC price but not because of halving. In fact, he says “an upcoming, known cut in supply, means zero.”
He explains that the amount of coin is one hundred percent meaningless, the supply constraint and a known schedule are what’s “very important” to the network value.
A 30% Drop in BTC price within a month of halving
What can’t be ignored are the previous price upswings. After the first halving, the one-year rise in BTC value was from $11 to $1,100 and the second halving’s record growth took us from $600 to $20,000 within 18 minutes.
But Loukas says that is a “serious case of bias fitting,” because the last halving period was actually a “poor performing period within a massive bull uptrend.” He shares a chart that shows that the price dropped 30% after the July 9, 2016 halving.
Towards the end of May 2016, the price of BTC began surging from $440 to climb to $770 in mid-June. In the beginning of July, the time the halving came, the price was trading at $660 that was followed by a drop to $550 in August.
From there, the rally continued to hit an all-time high of $20,000 in Dec. 2017 while recording several pullbacks on the way.
The May 2016 rally of 80% wasn’t “pre halving” rally, rather just another short term rally that we saw during that period, Loukas said.
Bitcoin’s 20-fold price increase between 4-year cycle Bullish
As for the miners’ reward that will be cut into half Loukas says miners do not sell reward, their business case is to hoard bitcoin. Miners he says believe that the world’s leading cryptocurrency will appreciate over time.
Miners actually sell their BTC because they have to cover operational costs. But halving does not change that cost, which means bitcoin miners will sell the same amount of BTC that they were selling before the halving.
What halving changes in the margins but “that’s not an issue in a secular bull market when the price is increasing 20-fold between 4-year cycles,” said Loukas.
And that is why the analyst is “very bullish” on BTC price, because of this 4-year cycles and not the halving.