The argument surrounding next month’s highly anticipated bitcoin halving is revving up.
The Bitcoin Halving: Could Be Bad, Could Be Good
The bitcoin halving is slated to bring the number of block rewards garnered by bitcoin miners down by half. The event is designed to control inflation and ensure bitcoin maintains a level of rarity that keeps it popular and useful in today’s growing financial markets.
While bitcoin has halved before, this event seems to be garnering more attention than past ones given that so many are convinced it will take bitcoin to the moon and beyond. Since the event was first announced, many traders and analysts of the currency itself have argued that the BTC price could potentially reach its all-time high again of $20,000 or more.
Mathew Dibb – co-founder and COO of crypto tracker Stack – is one of many arguing that the halving will do great things for the asset. In a recent interview, he states:
The 50 percent emission cut could serve as a catalyst for the digital asset’s continued appreciation.
For options traders, however, the upcoming halving represents an ugly time in which bitcoin is set to incur regular drops and almost daily suffering. Many are suggesting that small markers on technical charts show bitcoin as experiencing heavy losses or, at best, staying exactly as it is once the halving has occurred, meaning bitcoin won’t appreciate at all.
Emmanuel Goh – CEO of crypto derivatives research firm Skew – points his finger at some relatively new data to emerge from the company’s latest report that suggests a dismal future for BTC after the halving’s completion. He explains:
The put-call open interest ratio measures the number of put options open relative to calls… The rise in the put-call open interest ration from 0.42 to 0.61 seen over the last three weeks indicates increased focus on hedging the downside risk in bitcoin’s price.
The document suggests there is enough sentiment out there that bitcoin could drop just as easily as it could rise following May’s anticipated halving, and that people are already beginning to work towards keeping bitcoin stashes secure during what seems to be an unclear time in the currency’s history.
Is There Negativity in BTC’s Future?
To be fair to any doubters, halvings have resulted in heavy price drops for other assets in the past. Cases involve Litecoin in 2019 as well as bitcoin cash last week. The latter underwent a halving that saw it drop approximately ten percent in value, bringing its overall price down to about $221 per unit. The currency has again wandered into green territory, but there is still plenty of room for improvement.
Other concerns surrounding bitcoin is that the halving will result in the death of its mining industry, as block rewards have already been significantly reduced as the asset shed value during the coronavirus.