Bitcoin bull Thomas Lee, head of research at Fundstrat Global Advisors, predicts another good year for the globally dominant crypto currency.
While Lee got carried away by the unpredictability of the Bitcoin forecasts and missed his year-end target for Bitcoin by the end of 2019, the analyst still believes that the king of crypto-currencies, Bitcoin, is on his way to a major comeback.
Lee describes in a new CNBC money show (freely translated):
“2020 should be great for Bitcoin because, number one, the halving is happening – the block rewards for halving the miners. This is a big change in supply and demand. I think last year the White House ended the Bitcoin rally with its opposition, but with the presidential elections now underway, it won’t be in the headlines.”
He continues (freely translated): “This is a bull market for Bitcoin. And then with the geopolitical tension in the Middle East, that’s good for cryogenics. So there should be a lot of tailwind. We are also getting a lot more interest from our customers.”
In October 2019, Lee said that it would not be long before Bitcoin fully recovered and reached its all-time high of almost $20,000.
“There are not many assets that have survived the decline in value below 90%, but Bitcoin has survived time and again.”
The Bitcoin Halving due in May will also be decisive. Experts in the industry disagree on whether Bitcoin can benefit from it or whether it will have no significant impact on the price at all.
The first Bitcoin Halving took place on November 28, 2012. On that day the first 210,000 blocks were created, triggering the code that reduced the block reward from 50 BTC to 25 BTC. This meant that only 5.25 million BTCs would be generated for the next 210,000 blocks that were created.
Bitcoin was again halved on July 9, 2016, when the block height of the Bitcoin block chain reached 420,000 blocks. The block reward was then reduced from 25 BTC to 12.5 BTC. It is expected that 2.625 million BTCs will be created between 2016 and 2020.
What can we expect from Bitcoin Halving?
When the block height of the BTC reaches 630,000, the block premium will then decrease from 12.5 BTC to 6.25 BTC. By then, 18,375,000 BTC will already be in circulation, out of the maximum 21 million. Between 2020 and 2024 (the next expected Bitcoin half-year), however, only 1,312,500 BTC will be created.
At the most basic level, the halving of Bitcoin affects the miners, whose rewards will be reduced by half. It will require about the same effort to earn 50% less than before the halving. However, there are other factors at play, such as the scarcity of Bitcoin and the underlying impact on the value of the cryptos, market forces affecting the price of Bitcoin, and various other external events.
Many people in the crypto-community believe that halving Bitcoin could trigger a significant increase in Bitcoin prices. They cited earlier price surges that occurred a year after the halving, such as the one-year increase in BTC value from $11 to $1,100 after the first halving, or the record growth of the second halving from $600 to $20,000 within 18 months.
However, other people have said that the halving of Bitcoin in 2020 cannot be compared to the previous halving due to several factors, such as the increasing maturity of the market and the better halving of expectations in the crypto-community and the possibility that the effects of the halving are already priced into the current BTC prices.
Whatever the future holds for BTC value, people will see the halving of Bitcoin as a turning point.