Halving is an event in which the rewards for mining are cut in half. The first Bitcoin halving occurred in November 2012, with the second in June 2016. The third one is projected to occur in May 2020.
“Block reward” refers to the rewards given to miners in the form of new Bitcoin after they’ve finished a block. When 210,000 blocks are mined, the network goes through halving. In 2012, the block rewards were cut from 50 to 25 BTC per block, while in 2016 they decreased to 12.5. In May 2020, block rewards will fall to 6.5 BTC.
During the previous two halvings, the price consolidated before the event and accelerated the rate of increase afterward. It is possible that it will do so again.
Cryptocurrency trader @parabolictrav stated that after a long period of inactivity, he is opening a long. While he believes the Bitcoin price could continue falling, the end of the cycle should be near.
After much deliberation (been inactive since 8500) starting my next leverage long here
Thinking we could see as low as 7900-8200, but overall I think we're near the cycle low here
Next move is somewhere under ATH before halving, then blast off 3-6 months after halving
— ParabolicTrav (@parabolictrav) November 13, 2019
For the future prospects of the price, he suggests a near all-time high before halving, then a rapid increase 3-6 months afterward.
Let’s look at these statements individually and make a prediction for the price six months after halving.
Current Movement
The Bitcoin price is currently trading inside a descending wedge, having done so since the rapid upward movement on October 25.
Currently, it has reached the support area at $8600, which coincides with the 0.5 fib level, making it a suitable place for a reversal. Additionally, there is a strong bullish divergence in both the RSI & the MACD.
Therefore, this could very well be the cycle low, as suggested in the tweet.
Bitcoin Halving Price
The third halving is expected to occur in May 2020. During the two previous halvings, the price consolidated close to the support line prior to the event before the rate of increase accelerated afterward.
A near all-time high before halving, followed by a correction and the rate of increase picking up six months afterward, as suggested in the tweet.
This would mean that the rate of increase would accelerate towards the end of 2020 and would give us a price slightly higher than $100,000 in the summer of 2021.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images courtesy of Twitter, TradingView.
Did you know you can trade sign-up to trade Bitcoin and many leading altcoins with a multiplier of up to 100x on a safe and secure exchange with the lowest fees — with only an email address? Well, now you do! Click here to get started on StormGain!
