Over the past few months, hundreds of people have been working to answer this question: Will the halving increase Bitcoin's price?
What does the story of Halving tell us?
Of course, since this is not the first Halving since Bitcoin was born, but the third, first attempt to understand what impact it can have on the price of the cryptocurrency, it is to analyze what happened in previous Bitcoin Halvings.
If the Halving was designed by Satoshi Nakamoto as a deflationary mechanism for cryptocurrency in order to avoid a decrease in its value over time, by gradually reducing the expansion of its money supply, following the gold model. We can say that the objectives have been achieved so far.
In 2012, the first bitcoin was halved, which triggered a bullish price increase for the cryptocurrency with a dramatic 50.162% increase, the BTC peaked at $ 1,151. While there was a modest percentage increase of only 9,054% in the second half of 2016.
However, a much more impressive price was in December 2017 when it hit its all-time high of $ 19,499.
Still, it's important to note that these bullish rallies didn't start right after Bitcoin was halved. On the contrary, the path to the top of the cryptocurrency would have started almost a year before the 210,000 block was mined and halved.
The current context
Although history seems to give us reason to be optimistic about the price of Bitcoin after halving it. There is another factor we need to consider before claiming victory and sitting quietly while waiting for the price of BTC to rise. We are talking about the coronavirus crisis and the changes it is causing in the global economy.
In this regard we find two positions. Well, although we all agree that an economic recession is approaching like we have never known on a global scale. We do not all agree on the effect this will have on the value of the US dollar and Fiat money in general.
Within the crypto community, the analysis seems to suggest that any financial stimulus that governments around the world are giving their companies will result in a massive devaluation of fiat money, especially the American dollar. By furiously increasing monetary liquidity without the real economy being able to support this increase.
However, analysts from the international economy outside the world of cryptography do not seem to strongly agree with this theory. Well, contrary to what many crypto-influencers think, stimulus plans will increase demand for dollars worldwide.
As governments need more and more dollars to support their own economic plans. Even with the Federal Reserve's enormous monetary expansion, the value of the dollar will increase in the midst of this crisis.
So, what will happen to Bitcoin after the halving ?
However, the bitcoin price trend doesn't seem to be as clear as many crypto influencers expect. First of all, the trend of the previous Bitcoin halving does not suggest that the price of BTC will rise immediately and significantly.
When this increase occurs, it will be done gradually, following the trend of previous rallies generated by Halvings. It is also possible that on this occasion, the demand for Bitcoin, which would support a price increase, cannot be maintained in the medium term.
Second, the conditions of the global economy. Though they may be able to improve Bitcoin's price if it is proven that the cryptocurrency can serve as an active store of value, they could also lower the cryptocurrency if investors prefer to take refuge in a strengthened dollar rather than in the BTC.
Therefore, although the future of Bitcoin is not closed at all, and depends on a multitude of factors. We can safely assure that most indicators seem to indicate that the cryptocurrency is seeing an increase in value, and that the halving will effectively lead to a rise in its price.
BUT this will not happen immediately after the Halving, maybe it will be observed in the next year, following so the trend of previous Halving.