Bitcoin (BTC) advocates continue to focus on the May 2020 block reward halving this week as the impact on price becomes more apparent.
Analysts excited for high-stakes halving
In a Twitter discussion beginning Oct. 18, commentators noted that next year’s event will reduce the amount of new Bitcoin in circulation up to $63 million per week at current prices.
The block reward refers to the amount of new Bitcoins miners receive for mining a new block. Currently 12.5 BTC, after the halving, the reward will fall to 6.25 BTC.
Previous halving events have triggered upward price motion, leading to suggestions that 2020 will be no different. Additional studies, notably the popular Stock-to-Flow model, have corroborated the theory that Bitcoin price must surge as the mining reward decreases.
Comparing historical data, Crypto Rand noted that the 2012 and 2016 halvings removed $302,400 and $8.19 million per week from circulation respectively. 2020’s “most dramatic” halving, the analyst forecast, will remove $63 million.
Investor Alistair Milne broadly agreed, adding that at its current price of $8,200, there will be $51.7 million less in new Bitcoin each week.
“To those that think Bitcoin’s inflationary schedule is less effective with time … At current values (~$8200), 2020’s halving will remove $51.7million/week of newly mined Bitcoin from the sell-side,” Milne summarized on Monday.
Price on track for gains
Bitcoin’s drop to $8,200 placed it firmly in line with the Stock-to-Flow model’s expectations. Previously, when the price was higher, it was effectively “front-running” the historically accurate measure.
Nonetheless, the positive outlook is not shared unanimously. In an interview earlier this month, Jihan Wu, co-founder of mining giant Bitmain, warned the halving may not necessarily lead to the return of bullish sentiment.
“There are many uncertainties, but now is a good time to invest in crypto mining,” he said. Bitmain plans to operate the world’s biggest Bitcoin mining farm in Texas, the company revealed in a press release on Monday.