The next Bitcoin halving is scheduled for May 2020. Halvings happen about every four years and each time, the amount of new Bitcoin being mined is cut in half. After this next halving, the reward for successfully mining a block will be reduced from 12.5 coins to 6.25 coins, a big decrease in new supply. In the past, halvings have been extremely bullish for Bitcoin prices.
Here is what happened so far:
1st halving in 2012: Bitcoin prices went from $15 to a high for that cycle of $270.
2nd halving in 2016: Bitcoin prices went from $268 to $2,525 1 year later.
Interesting fact: There was a pullback of around before each prior halving. That’s exactly what we’re seeing now: 44% pullback from recent highs of $13,000. The retracements before the previous two halvings provided an amazing buying opportunity.
The halving is a serious catalyst and it has the potential to move Bitcoin much higher.
But the central banks and the worldwide governments are assisting, too. Central banks are printing larger and larger amounts of money to fund government deficits. And the US is definitely leading the way. The US Federal Reserve is buying $60 billion in Treasury bills per month, lowering interest rates and providing $87 billion of liquidity in the overnight repo market. The current annual U.S. federal deficit is $896 billion, according to the Congressional Budget Office (CBO). The national debt stands at more than $22 trillion. This year, the U.S. will pay out more than $500 billion in interest on debt. The CBO says that interest costs could surpass $1 trillion by 2028. To put that into perspective, total government revenue from taxes totals about $3 trillion per year.
This uncertainty surrounding this financial disaster should increase the value of Bitcoin, than Bitcoin was built as an alternative to the fiat system for exactly these reasons. It seems that this all adds up to a perfect storm for Bitcoin.
Don’t be surprised to see Bitcoin at prices of $50,000, 100,000 or even more soon. This is probably a unique opportunity to buy Bitcoin at the beginning of a new bull market.
Sven Franssen