The halving is fast approaching. Experts are divided on what will happen to bitcoin after this event. Will the price of cryptocurrency explode, stagnate or fall?
An event awaited for years will take place on April 20, 2024: the bitcoin halving. The exact time of the event has not yet been decided, but in any case, this halving is a major turning point in the history of cryptocurrency. After the first three halvings, the price of bitcoin increased impressively, before falling again.
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But today, a few days before the 4th halving in the history of bitcoin, experts in the sector have their doubts. Many think that this halving will be different and that it will not have the same effects on prices. Will the price of bitcoin increase after this halving? Will it stagnate? Or will it collapse? These are the three possible scenarios.
1st scenario: the price of bitcoin explodes
The first scenario corresponds to what happened during the first halvings. In 2012, after the first halving, bitcoin rose from 12 to 1207 dollars. Then, a few months after the 2016 halving, bitcoin experienced its first peak, going from $650 to $16,000. Finally, in 2020, bitcoin experienced its biggest increase, reaching $68,000 shortly after the halving.
By becoming increasingly rare over time, bitcoin artificially maintains its value, and therefore becomes ever more expensive. This is exactly what happened during the first 3 halvings, during which the value of bitcoin exploded.
One of the scenarios for the 4th halving is therefore that the value will continue to increase. This is the most popular scenario, but it is not the only one.
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2nd scenario: the price of bitcoin stagnates
The second scenario is the one in which the price of bitcoin does not increase that much. This is notably the option considered by a study by CoinBase who believes that this year's halving may not increase the value of bitcoin.
The site bases its diagnosis on several facts. First of all, the very nature of halving encourages speculation. The study points out that “ While it is possible that halving has a positive impact on bitcoin's performance, there is still little historical evidence of this relationship, making it somewhat speculative. “.
2nd reason: bitcoin already broke its previous record in March, more than a month before the halving. The craze for cryptocurrency was fueled by the promise of halving, but above all by the arrival on the market of new financial products, bitcoin ETFs. Now that the halving is arriving, the price increase could therefore be much less than those observed in previous years.
According to Claire Balva, “ many consider that the impact of halving is increasingly weak as the cycles progress. Indeed, the proportion of bitcoins remaining to be issued decreases over time and the impact of monetary issuance on supply (and therefore on prices) decreases. We can therefore imagine that halving will have a very low impact. »
3rd scenario: the price of bitcoin falls
Last option: halving could lower prices. Indeed, the last three halvings have created strong anticipation. Many have bought in recent months in the hope of selling higher once the halving has passed. However, if no one is ready to buy and if everyone waits in vain for an increase, prices cannot rise.
According to Claire Balva, we could witness an effect “ buy the rumor, sell the news », a phenomenon of speculation which is well known in traditional financial markets. “ It could compensate for the expected drop in supply and generate a drop in prices. This would nevertheless be a relatively one-off drop (a few weeks or months). »
Is a bigger and longer fall possible? This is very unlikely. The bitcoin market is now worth $1.3 trillion. It has been adopted by a large number of individuals, and by many large companies and institutions who have invested in bitcoin. So many players ready to ensure that its value will not drop to around 0. However, it is important to mention the fact that bitcoin remains hyper volatile: in March, when it had just broken its absolute price record , bitcoin fell by $10,000 in a matter of minutes. Even if it subsequently stabilized, it is important not to forget it, whatever the scenario that happens.
