Bitcoin is in the midst of a great run lately and for the year it is now up almost 200%. Bitcoin surged past the $10,000 mark late last week and shows no sign of slowing down, as the $11,000 mark was surpassed early this week. What is causing the latest Bitcoin surge? How long can we expect this bull run to last and what prices could we see going forward.
Bitcoin Surging Due to Liba and Anticipated Halvening
If you didn’t catch the news from Facebook from last week, the social media behemoth is planning to develop their own cryptocurrency called ‘Libra’ which will be unveiled next year. Many people believe that Facebook getting into cryptocurrency will be good news for Bitcoin because it means that cryptocurrency is going mainstream. Not only did Facebook announce their plans for Libra, they also listed a number of high profile companies that are already onboard in terms of backing Libra including VISA and Uber.
Another big reason for the Bitcoin surge is the upcoming “halvening” where the rewards to bitcoin miners are cut in half. By May of 2020 the reward will be cut in half and that could have huge ramifications. What that means is that the miners who have high-powered computers that solve math problems will get fewer bitcoins for their work. The rewards are halved every few years and it is expected that by May of next year the reward per miner will be cut in half.
“Bitcoin’s current inflation rate is approximately 3.76%,” Mati Greenspan, senior market analyst at eToro, said to the media, “In May of next year, it’s scheduled to be reduced to 1.8%.” The halvening occurs every four years because Satoshi Nakamoto, the unknown person or group that created bitcoin set it up that way. “One of the key features of bitcoin is predictability around the new supply that’s being released,” Garrick Hileman, head of research at Blockchain said to the media.
Bitcoin has a cap of 21 million for the amount of total Bitcoins. Many people believe that the halvening will force the price to go higher. “It’s the tightening of supply that forces the price upwards and the anticipation of less liquidity coming onto the market,” CryptoCompare CEO Charles Hayter said to the media.
Bitcoin Future Predictions
Some people are predicting great things in the future for Bitcoin while others are more cautious. Some people believe that the call by Treasury Secretary Steven Mnuchin for new global regulatory standards to bring cryptocurrency "out of the shadows" will hurt Bitcoin.
Other people believe that Bitcoin is going to soar to unprecedented heights in the next few years. Anthony Pompliano, co-founder and partner at Morgan Creek Digital said to the media that Bitcoin could hit $100,000 in the next two and a half years. “I believe that Bitcoin will reach a $100,000 price point before December 31, 2021. My current confidence level of this happening is around 70-75%.”
Pompliano went on to say it is all a matter of supply. “Bitcoin is a fixed supply asset with a disinflationary supply schedule. Over the next 2.5 years, there will be incredible increases in demand, while the total supply remains fixed and the new daily supply is decreased by 50%”
It should be noted that he did say the path to $100,000 will be rocky. “I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value.” He was one of the few that predicted Bitcoin would fall to $3,000 before bouncing back.
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