In the 11-year history of cryptocurrency, the May-destined halving 2020 is going to be held for third time. Surrounding the halving event, there are so many buzzing and humming that what could be the post-halving situation. Now put a glance on some BTC halving hypothesis according to the previous two:
1: Positive supply-side impact over the mid-to longer-term:
If no price rise is seen after halving happens, some equipments of the most extreme low-cost electricity miners will become oldfangled and this will lead the mining industry to be lowered. Miners will not be able to sell much of their undergoing production to cover costs because of drastically reduction in persistent selling pressure caused by miners.
2: The halving will be a big fat nothing-burger:
No major impact on the price will be noticed if the daily volatility is between 1%-5% in BTC price is ordinary. As miners use reserves to cover potential revenue losses, there may be a short-term downwards pressure on price. But during the large drawdowns in prices, the pressure should be well-balanced.
3: Causing extra selling pressing driving prices down:
Selling pressure can rise when the price of BTC is lower than miner’s return and this can go deep into the reserves. On the contrary to that, no sell is needed when the price of BTC is higher than miner’s return.
4: Traders who have been buying the rumor will sell the news:
Considering the bullish expectations of halving, the current price has significant speculative demand. BTC went through a large sell-off after the Litecoin (LTC) halving was done in 2019. There must have some speculative demand because of halving narrative.
5: Bitcoin’s post-halving stock-to-flow ratio will cause upwards price pressure:
When a halving takes place, the stock-to-flow ratio doubles and the model price increases according to the stock-to-flow (S2F) model. It is expected that because of the accurateness of this model, the supply reduction will impact BTC supply-side positively. Reportedly, a new twist of the S2F model has been published.
6: The halving will lead to a mining death spiral:
Reduction in a large amount in mining reward leads to mining unprofitability while the reduction of hashrate causes the block frequency to grow until the next block is many hours or forever away; the system becomes less useful. If more than 80% of price drop is seen, then large mining enterprises will soon shut down but this had not been seen in previous two halving.