This week, bitcoin offshoots bitcoin cash and bitcoin SV will also go through halvings—with the number of new tokens awarded to so-called miners cut by half—and giving bitcoin and crypto traders some indication of what to expect for bitcoin itself in mid-May.
Bitcoin cash, which split from bitcoin back in 2017 amid a row over the size of bitcoin’s block size, will see its reward for miners fall from 12.5 bitcoin cash tokens to 6.25 on April 8.
Later this week, bitcoin SV, a further fork of bitcoin cash, will go through a similar token halving.
The halvings this week could push bitcoin cash and bitcoin SV miners toward bitcoin—something that could send the bitcoin price higher.
“There is a real risk that the hash rate might be temporarily halved on both the bitcoin SV and bitcoin cash networks until the bitcoin halving in May, unless the price of the coins or the transaction fees of the networks increase significantly relative to bitcoin,” analysts at Arcane Research have found.
Bitcoin is set to see its coin reward to miners fall from 12.5 bitcoin per block to 6.25 on May 13, 35 days from now, with the cryptocurrency community already looking forward to what’s expected to be one of the biggest ever events in crypto.
“As the third halving event to occur, there are expectations for what might come after, with history telling us that the bitcoin price will typically begin to rise significantly within the 12 months following a halving—something that can be simply put down to supply and demand,” said Danny Scott, the chief executive of Isle of Man-based bitcoin and crypto exchange CoinCorner, adding he expects the bitcoin price to surge back to its all-time high of around $20,000 per bitcoin this year.
There have already been two bitcoin halvings since bitcoin launched in 2009, one in 2012 and another in 2016. Bitcoin halvings are scheduled to continue roughly once every four years until the maximum supply of 21 million bitcoins has been generated by the network—which isn’t expected to happen until well into the next century.
Bitcoin and cryptocurrency prices have broadly climbed this week, somewhat in anticipation of the upcoming halvings, but the global coronavirus crisis and government’s extraordinary lockdown measures have dominated traditional and crypto markets.
Bitcoin and its forks’ upcoming halvings puts them directly at odds with the massive stimulus measures and quantitative easing unleashed by the U.S. government, the Federal Reserve and other central banks around the world to spur economic activity as countries shut down to try to contain the coronavirus COVID-19.
Bitcoin’s halving has “recently been dubbed the ‘quantitative hardening,'” according to Scott, with CoinCorner reporting that March was its busiest trading month in two years.
Some have suggested surging bitcoin demand could result in a bull run to rival bitcoin’s epic 2017 rally that saw the bitcoin price climb from under $1,000 to around $20,000 in less than 12 months.
Other bitcoin and crypto exchanges have reported a similar uptick in activity over the last month with year-on-year U.S. registrations for London-based bitcoin and crypto specialist broker eToro soaring 221% in March.
“People are coming to us to invest in crypto-assets so we are still very bullish on its long-term potential,” said Guy Hirsch, eToro’s U.S. managing director, adding: “There is a growing consensus that due to the Fed announcing unlimited quantitative easing, investors could soon be looking to bitcoin as an inflation hedge against a depreciating dollar.”
Other bitcoin and crypto market watchers are similarly upbeat, betting on bitcoin as a “store of value” due to its “scarcity.”
“Whilst halving events have previously generated major bitcoin price runs, I believe that other key drivers will have a more significant, longer-term impact on the price of the digital currency,” said Nigel Green, the chief executive of financial advisory group deVere, pointing to central banks cutting interest rates to zero in an attempt to offset the economic turmoil wrought by the historic coronavirus pandemic.
“In this time of economic turbulence, the growing consensus that bitcoin is becoming a flight-to-safety asset has further strengthened,” Green said.