Bitcoin is about to enter new “halving” territory in the coming days, and many analysts are unsure of what to make of the event considering the COVID-19 pandemic continues to rage on.The Halving Could Be Hit By COVID ConditionsAt first glance, it doesn’t look like a health scare of this magnitude would affect a single asset so heavily, but clearly bitcoin has been hit hard over the last three months. The currency was initially trading for well over ,000 in mid-February. From there, it fell into the high ,000 range during early March. At that time, the coronavirus had reached several new areas and health officials began to recognize the threats that potentially came with it.By mid-March, bitcoin was trading in the ,000 range, having lost roughly half its value within a matter of
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Bitcoin is about to enter new “halving” territory in the coming days, and many analysts are unsure of what to make of the event considering the COVID-19 pandemic continues to rage on.
The Halving Could Be Hit By COVID Conditions
At first glance, it doesn’t look like a health scare of this magnitude would affect a single asset so heavily, but clearly bitcoin has been hit hard over the last three months. The currency was initially trading for well over $10,000 in mid-February. From there, it fell into the high $8,000 range during early March. At that time, the coronavirus had reached several new areas and health officials began to recognize the threats that potentially came with it.
By mid-March, bitcoin was trading in the $5,000 range, having lost roughly half its value within a matter of weeks. For a brief period, it touched the high $3,000 range before recovering back to $6,000 and then $7,000, where it seemed to hover for some time. This was later followed by surges into the $8,000 and $9,000 ranges, where it has stayed over the past 48 hours.
All this within the course of three months… Volatility is clearly at an all-time high, and while some are anticipating that the upcoming halving will be nothing but rainbows and lollipops for the world’s number one digital asset, some think the economic conditions brought on by COVID-19 could continue to wreak havoc on the crypto industry.
One such figure is Ryan Watkins, a research analyst with Messari. In a recent interview, he claims that the coronavirus could potentially prove to be one of the biggest barricades to bitcoin’s alleged halving success. He states:
The force of bitcoin’s prime marketing event is colliding with the opposing force of an incredibly uncertain macroeconomic environment that continues to be an overhang on every asset class.
Matt Weller – global head of market research at GAIN Capital – offers a more lukewarm position on the upcoming halving, stating:
From an efficient market perspective, any fundamental reaction to the halving should be heavily priced in at this point. After all, it’s hard to image a more predictable event than an unalterable supply reduction that has been scheduled for more than a decade in a liquid, heavily-traded… asset.
A History of “Cutting” Bitcoin in Half
Bitcoin’s first official halving occurred in 2012. At that time, miners received as many as 50 BTC units for extracting new coins. That sounds fine at first, though bitcoin wasn’t anywhere near the price it is today back then. Hopefully all those miners kept their digital holdings and allowed their stashes to grow with time.
Following this event – and the mining reduction to 25 BTC – another halving occurred in 2016, in which rewards were reduced to 12.5 BTC units. Now, this third official halving will reduce rewards to 6.25 BTC.