The crypto community is gearing up for Bitcoin or BTC’s scheduled “halving” next year, but its exact effects on the price of the popular cryptocurrency are unknown at this point. There are those speculating that the 2020 event will surely ignite a bull run, but for one analyst, BTC will have to drop to $4,500 before any rally takes place.
On Wednesday, analyst Willy Woo offered details on his perceived BTC bearishness prior to the next halving. Woo spoke with trader Tony Vays over a YouTube live video, and both foresee an imminent drop for the price of the king of cryptos.
The level that Vays and Woo see Bitcoin plunging to is near $4,500.
“At some time before the halving probably not in February time so probably around my conference in Las Vegas […] what I can foresee is that one final capitulation — like if we consolidate in this $7,500 to $9,000 range going in to January and February — I can see a swift like 50% drop similar to the drop we had in December last year,” said Vays.
He added, “I can foresee something like that for the price of Bitcoin falls from this $8,000 area down to $5,000 or may even $4,500, but then it’s back above $9,000 or $10,000 within weeks.”
The Bitcoin halving or “halvening” is set to occur in May 2020, and those that will be affected are miners or those who process BTC transactions. Halving pertains to the reward miners receive reducing to half. Miners currently receive 12.5 Bitcoins for completing a transaction, and that will come down to 6.25 next year.
Why a bull run?
Most expect a bull run since supply will be effectively cut short, and miners will charge higher for their Bitcoins to sustain their operations. Some also use models like the stock to flow approach that predicts BTC prices not short of $100,000.
Of course, for true-blue technical analysts, any information that’s known or can be known about an asset is already priced in, and the Bitcoin halving is said to be factored in the bull move that pushed BTC to its 2019 high.
Despite being cognizant of the reduction of mining rewards, there are company’s that have embarked on building extensive mining facilities. Texas has been a hotspot for Bitmain, Layer1, and a team-up of Northern Bitcoin and U.S. Whinstone that have taken up significant investments to pursue their ambition of dominating Bitcoin mining.