Cryptocurrency miners expect the price of Bitcoin to surpass the $12,000 mark after the halving event takes place and they are hoarding most of the BTC they mine.
BTC Price to Surpass $12,000 Soon
Bitcoin miners are hoarding the cryptocurrency they are mining as they believe the price of the leading digital currency will surpass the $12,000 mark after the halving event. The Bitcoin halving event, which is set to take place in 4 days, will see the mining reward slashed from 12.5BTC to 6.25BTC per block. Historically, each halving event has been followed by a price rally, and miners expect the same to happen this year.
Bitcoin has already embarked on a mini-rally following a disappointing performance in March and April. However, the leading cryptocurrency is now trading around the $10,000 region and could be set to surge higher in the coming days and weeks.
According to ByteTree, miners held over 1,067 Bitcoins over the past week. The hoarding comes as a result of their belief that the price of the leading cryptocurrency will surpass its current price level once the halving event occurs on Tuesday. Given the deflationary nature of Bitcoin, events such as halving that affect its supply will definitely impact the price. In the medium and long-term, data shows that the miners believe the halving will help push the price of the cryptocurrency substantially higher.
The co-founder and Chairman of ByteTree, Charles Morris, pointed out that usually, miners hoard most of the Bitcoin they mine without selling it to cover for their expenses. However, ByteTree’s research paper pointed out that this time, things are different. The miners are hoarding the BTC because they think its price will soar. Morris noted that the recent price surge is an indication that miners also believe that prices will go higher post-halving.
Cost of Mining
The increase in the cost of mining is another reason why the miners could believe that the BTC price will go higher. In 2018, the average cost of mining 1 BTC was around $4,758 in the United States and approximately $3,200 in countries with lower electricity tariffs like China. Earlier this year, the price of mining 1 BTC was around $6,851, which means prices staying above the $7,000 mark means profits for the miners.
With the high cost of mining, the BTC price staying around the $8,000 and $9,000 region is essential for the Bitcoin network on Tuesday. This is because if the BTC price were to hover around $6,000 or $7,000, some miners would temporarily shut down their machines as the cost of mining will increase, and they will be running at a loss. After halving, the breakeven cost of mining is expected to be somewhere around $12,000 and $15,000. Thus, since the cost of mining 1 BTC will be about $12,000, the miners expect the price of Bitcoin to surpass that level and be somewhere around $15,000 in the medium term.
With the halving event just four days away, the cryptocurrency sector remains positive about the price of Bitcoin and the general outlook of the market. Bitcoin has recovered excellently following the crash to $3,600 on Black Thursday on March 12. The coronavirus pandemic has affected the global financial markets, and cryptocurrencies have not been left out. However, the recent market performance suggests that the crypto market has broken away from the stock market and is now heading to better returns.