Starting May 12, 2020, the Bitcoin reward given to those on the network – in other words, miners – will be cut in half, from 12.5 to 6.25 per block.
Bitcoin’s slowdown will only add to the scarcity of the coin, which will reach a maximum of 21 million coins once mining is complete.
In theory, the coin’s price should rise as supply and demand laws come into effect, which was the case the last two times the crypto asset halved in 2012 and 2016.
“I think it will have a positive impact over time. I think this will play out over the next six months,” explained Mr. Andersson.
“Today, around 1,800 bitcoins are mined every day. From May 12, it will be reduced to 900 bitcoins per day, so you will have less selling pressure on bitcoin by around $8 million per day, which will have a positive impact on the price.
The crypto trader said we simply lack the history to know if the coin will rally again in the near term, despite the 2012 rally that saw the asset grow 90 times.
“I think we only have three of these events going back, it’s only happened twice in the past because it’s programmed into the Bitcoin software to halve every four years. So we don’t have much of a story to tell, but basically there will be fewer bitcoins, which should have a positive impact in the long term,” Mr. Andresson continued.
This timing could benefit the alternative currency as central banks around the world are doing the exact opposite to support global economies, with Australia’s central bank alone adding $90 billion to the system through cheap credit.
“I think after seeing the response to the current global crisis, we will see even more money printed, which could devalue our usual currencies even more,” Andresson said.
“This is part of why bitcoin was created to create an alternative to central banks that can print an unlimited amount of money.
“This is not the case with Bitcoin, we have a limited supply of 21 million coins and no one can change that.”
Investors who might believe that the opportunity to purchase new crypto assets, such as Bitcoin, is over due to already strong growth are advised that the asset class still has a way to go.
“We believe there is still potential in crypto assets, not only in bitcoin, but in other assets as well. Bitcoin is relatively small compared to other assets. It essentially trades at the market capitalization of a large technology company. To become a new asset class, it has to be much bigger than it is today,” he said.
“If traditional investors really see this as a new type of gold, maybe digital gold, I think we will see more institutional investors enter the space and that will lead to higher values in the future .”
Addressing skeptics of the asset class – particularly those who note that bitcoin fell during the market panic, which is the opposite of what traditional hedging does – Mr. Andersson argued that the Bitcoin has consistently outperformed any other asset class.
“During the market panic in March, we saw the correlation between all asset markets increase. In reality, what happened is that the external factor is that the virus hit all the markets at the same time,” he said.
“I think these correlations will decrease in the future.
“But if you look year-to-date, crypto assets have outperformed all asset classes. Since the beginning of the year, bitcoin is up 20 percent, which is more than gold and, as we know, stock markets are down this year.
