Bitcoin’s chances of flying to the moon at the end of the year are dwindling. The downward trend of the last six months is intact – and it doesn’t look as if the situation will be reversed in the next few weeks. All hopes now rest on Bitcoins halving in May next year.
But is the event really the longed-for rescue for which many think it is?
Bitcoin will be dumped again… and dumped
A few hours ago, Bitcoin dropped out of its three-day consolidation channel and tilted to 7,100 dollars according to Tradingview.com. At the time of writing, Bitcoin was trading just above this level, but was ready to fall back into the high $6,000 region. The move marked a loss of 3% that day.
Bitcoin has lost nearly 8% since the weekend – and the downtrend is strengthening. Analysts now agree that $6k is the next level that is likely to be reached before the end of the year.
This leaves all hopes on the BTC halving. According to the countdown, it is scheduled for May 14th. The halving is associated with a number of upside factors – such as a smaller number of coins being added to the total supply. This increases the shortage.
FOMO before halving?
As the block reward is reduced from 12.5 to 6.25 BTC, Bitcoin’s inflation rate also falls below the central bank’s target of 2%. Bitcoin inflation will be 1.8%. One thing is certain: the scarcity concept is intended to boost demand.
Earlier halving in 2012 and 2016 led to rising Bitcoin prices – after the event, not before. As industry analyst PlanB points out, it took no longer than a year for the market to gain momentum. If history repeats itself, the markets will gain momentum in mid-2020. The analyst adds that the increase 2016-2017 was slower because Altcoins and ICOs stole some of the show – but that won’t happen in 2020.
Bitcoin’s market dominance is currently close to 70% and has risen 30% this year.
Another important factor is the stock-to-flow model, which defines the relationship between issuance and current inventory. This doubles after halving, which is very important as there is no way to artificially increase inventory.
The general scene is very bearish at the moment, which is why many claim that halving will not have a major impact on prices. But the story has shown something else: The digital asset will be stronger than before in terms of scarcity. However, only time will tell whether it will return to the familiar patterns.