Prominent American economist and well-known Bitcoin critic, Peter Schiff, believes that the price of the asset will drop following the upcoming halving. He reasoned that the demand will fall after the event, which will result in a bearish BTC future.
Schiff Predicts A Price Drop For BTC (Again)
As Cryptopotato reported recently, the primary cryptocurrency is outperforming gold in terms of yearly gains. Although both assets have marked increases in 2020, BTC is up by 23%, while the precious metal has increased by 12%.
However, long-time BTC basher and popular gold bug, Peter Schiff believes that “on a risk-adjusted basis, Bitcoin’s 23% gains versus gold’s 12% rise is far less impressive. With the halving just six days away, Bitcoin’s YTD gains can face fast.” Later, he offered his arguments on why the primary cryptocurrency could tank soon:
“#Bitcoin will not become more scarce after the halving. Its supply will keep growing, but maybe more slowly. However, as buyers have been front-running the halving for months, the demand will actually fall once it occurs. Falling demand and rising supply is bearish for price.”
Lastly, Schiff also insisted that the fading demand after the halving will eventually mean “trouble for miners.”
Is He Right?
While he’s usually overly negative regarding his perception of Bitcoin, Schiff could have a point on some of his remarks now. For instance, recent data showed that investors had been particularly interested in accumulating bitcoins ahead of the halving. The number of new BTC wallets increased by over 430,000 in the past 90 days.
At the same time, whale accounts containing over 1,000 BTC reached a new high, similar to what happened before the 2016 halving. Yet, shortly after the event, most of them dumped their holdings at the time.
As far as miners are concerned, the third-ever halving scheduled to take place next week will indeed slash in half the rewards they receive for their efforts from 12.5 BTC per block to 6.25 BTC per block.
Research from earlier this year estimated that Bitcoin has to reach approximately $15,000 after the event if it’s to remain profitable for miners. Meaning, the price of the asset has to increase by 66% from the current level of $9,000 to continue incentivizing miners.
The majority of the cryptocurrency community also agrees to some extent with the adverse price predictions from Schiff. Several polls from this week showcased the prevailing opinion that the primary digital asset will initially drop after the halving but it will skyrocket later on.
History is also siding with the argument that Bitcoin will surge eventually. While previous events should not be used to make future price predictions, in the months after the 2012 and 2016 halvings, the price of the asset increased significantly.