Since the start of 2020, the Bitcoin price has surged higher, outpacing effectively all other multi-billion-dollar assets except for a select set of altcoins (like Ethereum and Litecoin) and Tesla.
In fact, year to date, the cryptocurrency has gained 30%, rallying from the $7,000s to $9,200, where it trades at as of the time of this article’s writing.
Per a leading industry executive and technologist, this 30% rally is a precursor to something even greater, saying in a recent interview that Bitcoin is likely to set a new all-time high price above $20,000 in 2020.
Bitcoin’s Halving Could Send Prices Flying
Alex Mashinsky, the CEO of crypto finance platform Celsius and purported inventor of VOIP (the technology that allows people to call each other over the internet, recently sat down with cryptocurrency research and data site Messari to talk about digital assets.
The conversation, while primarily focused on his crypto finance company, veered into talk about the Bitcoin market.
Mashinsky said in the podcast that the Bitcoin block reward reduction or “halving” taking place in May — during which the amount of BTC issued per block will be cut in half, decreasing the asset’s inflation rate by 50% — will have a dramatically positive effect on the price of the cryptocurrency:
I think that Bitcoin ends the year with a new high. I estimated $30,000 but it’s going to be somewhere between $20,000 and $30,000.
He added that the halving coupled with increasing global uncertainty could create a perfect storm for Bitcoin to start appreciating towards the price target he laid out.
Mashinsky isn’t the only cryptocurrency executive to have discussed the sentiment that Bitcoin’s halving will send the price of the cryptocurrency well past its past all-time high.
According to a Medium post written by The Spartan Group, a blockchain advisory and investment firm run by individuals formerly of Goldman Sachs and other firms, Bitcoin could hit $40,000 due to the halving.
Not to mention, the so-called stock-to-flow model of Bitcoin’s price created by PlanB suggests Bitcoin will have a fair value of $55,000 per coin after the halving.
The model, which relates BTC’s market capitalization to the scarcity of the asset, has been backtested to a 95% R squared.
While $55,000 for each BTC seems irrational, PlanB concluded his report on the model by writing that money from silver, gold, negative interest rate economies, authoritarian and capital control-rife states, billionaires looking for a quantitative easing hedge, and institutional investors will eventually flood into this space, pushing the price of Bitcoin far higher.
Some Throw Cold Water on Halving Narrative
Some have been a bit skeptical of the optimism surrounding the halving, however.
Speaking to Bloomberg, Eric Turner, the director of research at Messari, reminded readers that those relating halvings to price booms are using a sample size of two, making it “hard to assign any statistical significance to the event”. Gil Luria, managing director at DA Davidson & Co., echoed this sentiment, stating:
Since halving events are known well in advance, it is unlikely that they would have any impact on the price of Bitcoin. There are so many factors that impact the price of Bitcoin, but this should not be one of them.
Also, per previous reports from Blockonomi, co-founder of Bitmain Jihan Wu said that he believes that a Bitcoin bull run may not follow the halving next year. With Wu being a key member of the mining industry, this statement does hold a lot of weight.
