The crypto markets are currently abuzz with speculation regarding the upcoming Bitcoin halving. Although most analysts believe that it will lead to a massive increase in the price of Bitcoin, nobody knows for sure. Now, however, one of the leading crypto profiles is saying that the Bitcoin halving has not yet begun to affect the price of Bitcoin.
Bitcoin halving to act as a catalyst for Bitcoin price gains
Specifically, this comment comes from an interview with Changpeng Zhao, the CEO and founder of the major cryptocurrency exchange Binance. Some analysts have said that Bitcoin’s bullish momentum during the past month was due to the impending block reward halving.
However, if one is to believe Zhao, it seems that the Bitcoin halving will have a far more profound impact on the price of Bitcoin than we have yet to see. Zhao prefaces this by highlighting the historical price performance of Bitcoin.
For example, he notes that each previous halving became a catalyst for further price gains. Although Zhao admits that historic events do not always accurately predict future ones, it does provide a frame of reference.
Double the resources to mine a coin, double the price?
What’s more, this is not just conjecture. Rather, Zhao bases the assumption on a version of the S2F (stock-to-flow) model. Put simply, Zhao argues that as the block rewards are cut in half, miners will have to spend roughly two times as much resources to mine a single Bitcoin.
Zhao also states that the main price driver for Bitcoin is demand and not the cost of production. However, he thinks miners will be unwilling to sell Bitcoin below the price of production. As such, rising costs of production could still dramatically impact the price of Bitcoin.
In the recent interview, Zhao also states that rising Bitcoin prices is the result of a simple supply-demand equation. The Bitcoin block reward halving will effectively lead to lower, or more resource-intensive, coin production.
“Demand is increasing, supply is decreasing”
At the same time, Zhao also foresees an influx of cryptocurrency users. For example, yesterday Coinbase came out with the news that they had become a principal Visa member. Coinbase Card could, as such, soon receive major upgrades attracting more customers.
This is just one of many interesting developments that could drive more people towards crypto. Consequently, Zhao states that a “perfect storm” of sorts is shaping up to drive the price of Bitcoin higher.
“The demand side is increasing, the supply side is decreasing.”
Nevertheless, Zhao also points out that there’s significant psychological resistance around the $10,000 line. As such, it could take Bitcoin some time to permanently surpass the $10,000 barrier:
“There are psychological barriers around nice round numbers. So, $10,000 is a very nice round number, so […] the price will fluctuate back and forth around that a bit.”
Moreover, this is not the first high-profile mention of the Bitcoin halving as a major catalyst for Bitcoin. In fact, Coinbase recently said that the upcoming Bitcoin halving could bring Bitcoin closer to becoming “digital gold”.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.