Analysts Evaluated 5 Popular Bitcoin Behavior Scenarios After Halving

David Kemp

The CoinShares company evaluated five possible scenarios of Bitcoin behavior after the upcoming halving—from catastrophic and negative to positive and neutral.

Although the industry has already gone through two halvings and their results are well known, experts are still of different opinions on the consequences of the next-week halving of miners' reward.

The third halving will indeed be quite different from the previous ones. The five most popular theories and scenarios are presented below.

Catastrophic: halving might cause the so-called mining “death spiral”. This unlikely scenario presupposes that the value will begin to gradually decline, forcing miners to shut off their equipment. This, in turn, will lead to stagnation of the Bitcoin network: hash rate reduction, slow block generation, and so on. The cycle will recur until a complete stop.

Extremely positive: following the model of Stock-to-flow. The scenario is called credible, but many points remain controversial. 

Negative: Traders buying on rumors may start selling on news—quite likely. CoinShares makes a reference to last year's Litecoin halving when the value of a coin significantly dropped within four months after the event. According to the scenario, the bitcoin price will depend on speculators.

Negative: additional pressure from miners on the BTC price is quite probable as well—especially in conjunction with speculators from the scenario above. The effect will be enhanced with a decrease in quotes.

With minimal consequences: nothing special will happen, at least at first. The scenario is called possible, the volatility being within 1–5%.

CoinShares believes that the latest drop in BTC prices along with the upcoming halving prompted miners to reinvest and upgrade their equipment. This will consequently result in a decreased impact on the bitcoin value through the sale of coins.

We recall that the formerly well-known trader Joe007 expressed doubts that the upcoming halving would lead to a drastic increase in the cryptocurrency market value, calling the current BTC price “overvalued”.

Speaking about the long run, Dan Morehead, CEO at Pantera Capital cryptocurrency hedge fund, considers that Bitcoin will grow to $115,000 by August 2021.

The CoinShares company evaluated five possible scenarios of Bitcoin behavior after the upcoming halving—from catastrophic and negative to positive and neutral.

Although the industry has already gone through two halvings and their results are well known, experts are still of different opinions on the consequences of the next-week halving of miners' reward.

The third halving will indeed be quite different from the previous ones. The five most popular theories and scenarios are presented below.

Catastrophic: halving might cause the so-called mining “death spiral”. This unlikely scenario presupposes that the value will begin to gradually decline, forcing miners to shut off their equipment. This, in turn, will lead to stagnation of the Bitcoin network: hash rate reduction, slow block generation, and so on. The cycle will recur until a complete stop.

Extremely positive: following the model of Stock-to-flow. The scenario is called credible, but many points remain controversial.

Negative: Traders buying on rumors may start selling on news—quite likely. CoinShares makes a reference to last year's Litecoin halving when the value of a coin significantly dropped within four months after the event. According to the scenario, the bitcoin price will depend on speculators.

Negative: additional pressure from miners on the BTC price is quite probable as well—especially in conjunction with speculators from the scenario above. The effect will be enhanced with a decrease in quotes.

With minimal consequences: nothing special will happen, at least at first. The scenario is called possible, the volatility being within 1–5%.

CoinShares believes that the latest drop in BTC prices along with the upcoming halving prompted miners to reinvest and upgrade their equipment. This will consequently result in a decreased impact on the bitcoin value through the sale of coins.

We recall that the formerly well-known trader Joe007 expressed doubts that the upcoming halving would lead to a drastic increase in the cryptocurrency market value, calling the current BTC price “overvalued”.

Speaking about the long run, Dan Morehead, CEO at Pantera Capital cryptocurrency hedge fund, considers that Bitcoin will grow to $115,000 by August 2021.