Bitcoin remains a controversial asset with most people either believing it as doom to be valueless or set to be worth $1m a coin. As such it is probably a fair bet to say say it will do neither.
Here is the state of play:
This is what happened last time:
The idea is that the price will go up because the supply of new coins will halve, so on an even keel basis there will be the same demand but less supply. The increase of Bitcoin supply will half but interestingly it will also fall below the recent rate of US dollar inflation. So the thinking goes: Supply of new Bitcoin down + supply of Bitcoin less than US dollars (substantially less since the recent titantic stumulus packages) + ever increasing spread of acceptance = significant price rise.
Doomsters say that miners will flee as they can no longer make money mining and the blockchain will cease up. However every two weeks the mining difficulty retargets to take that into account, so this scenario simply won’t happen and in the end transaction costs would make up for any drop in new coin rewards if the situation became difficult. A $6 per transaction fee would fill the gap, which is super pricey, but not when large transactions are at stake.
The ‘Halvening’ wont break Bitcoin but will it be the beginning of the next leg up?
I think so.
Will it catapult Bitcoin to $100,000 a coin?
It could happen ‘but I want to believe’ because I have a pile of Bitcoins.
The key factor will be the shape of the developing Coronavirus recession. The outcomes of these huge stimulus packages are impossible to predict. Not only is their effect utterly unpredictable but even their scale is uncertain. Bitcoin is just a tiny sideshow to all these goliath moves.
The only outcome that would hurt BTC is deflationary depression and with trillions of cash being helicoptered into bailout everyone, at least the deflationary part seems hard to imagine.
What isn’t so hard to imagine is something the Ex-Federal Reserve Chairman brought up. Hysteresis. That’s not the electrical thing it’s the political type. Hysteresis is what Marxists explain away the fact their ‘fabulous’ theories never seem to be adopted or work. It’s a shock to the system that is needed to create the momentum for a sudden and irreversible change. That Ben Benenke should bring up the prospect for that is enough to make your ears burn. Bitcoin $1m is totally ridiculous but then....
Whether Hysteresis would mean a trillion dollar bill or something else entirely, it wont do Bitcoin any harm.
Love it or hate it, in times of Hysteresis a Bitcoin wallet would be a prized possession. Even without the ‘halvening,’ bitcoin looks good as a haven/flight asset in very uncertain times.