Even despite the recent carnage in the Bitcoin market, many industry observers are still bullish going into the last few weeks before the halving. However, not everyone is expecting a price higher than $6,900 prior to the BTC supply shock.
Who’s Buying Bitcoin Right Now?
The concept of supply and demand dictates that, all other things being equal, a change in the supply of something will impact its price. An abundance of an asset in a market will see the price of the asset fall, whereas greater scarcity will mean higher prices.
Bitcoin experiences forced adjustments to its issuance rate every 210,000 blocks (around four years). During the halving, as this event is known, the number of fresh Bitcoin added to the circulating supply with every block is cut in half. This May it will fall to just 6.25.
Given the halving’s impact on supply and how the event has preceded major price rallies on both previous occasions, much of the cryptocurrency industry remains bullish, even after the dramatic price moves of late. However, the important thing about the relationship between supply and demand is that all other things need to be equal for a tightening of supply to drive prices up.
With traditional market analysts predicting another downturn before any recovery from the impact the coronavirus has had on global markets, demand remaining equal is anything but a certainty. As BeInCrypto recently reported, ING, the Dutch multinational bank, notes a sharp drop in European market sentiment, a preoccupation with avoiding unemployment, and a reluctance to make large purchases. US consumer confidence is similarly shot right now:
— Bloomberg Markets (@markets) April 2, 2020
Thanks to the coronavirus, businesses around the world remain closed until further notice and a huge percentage of the global population is observing social isolation measures. Millions have already been laid off globally, and millions more will surely be fearing the same. Under these circumstances, it’s hard to imagine great swathes of capital flowing into the Bitcoin market.
Morgan Creek’s Jason Williams is among who that believe that the Bitcoin price is heading down before the halving.
The price of BTC will go down from here at the halving.
— Jason A Williams (@GoingParabolic) April 1, 2020
A Light at the End of the Tunnel?
Much of the cryptocurrency industry is celebrating the infinite quantitative easing measures brought in by central banks around the world as a multi-trillion-dollar advertising campaign for Bitcoin. Certainly, money printing on the scale announced by the Federal Reserve should make scarce assets more attractive as a hedge.
However, to think that people will suddenly reject the dollar at a time of great crisis seems unrealistic. Almost every facet of modern life has ground to all but a stop in recent weeks. People unsure if their job will be there tomorrow care about their immediate circumstances more than taking on speculative investments. They want to keep food on the table and shelter overhead. In such a situation, it seems doubtful that a Bitcoin allocation will be on many folks’ minds.
Like ING and other analysts, Williams isn’t expecting the current downturn to last forever. The Morgan Creek partner actually thinks the Bitcoin price is heading to a new all-time high this year.
The world is trading #bitcoin 24 hours a day. 7 days a week.
New ATH coming in Sept of this year IMO. pic.twitter.com/X2mygZMVkV
— Jason A Williams (@GoingParabolic) April 2, 2020
In the above tweet, Williams predicts the Bitcoin price will rally to more than $20,000 in the months following the halving.