Bitcoin Halving is coming, but what will this affect the price?
The Bitcoin halving event is several months away. This means that the effect of block reward cuts will begin to affect. And the question is, how will the halving impact Bitcoin price from now on?
What is Bitcoin halving?
Bitcoin halving is understood to mean that for every 210,000 Bitcoin blocks that are generated (about four years), the reward for mining from 1 new Bitcoin block is halved. As a result, the total supply of Bitcoin is always limited to 21 million coins.
- The first Bitcoin halving: From January 3, 2009, to November 28, 2012, 10,500,000 BTC were generated, an average of 50 BTC every 10 minutes.
- 2nd Bitcoin halving: From November 28, 2012, to 9.7.2016, there are 5,250,000 BTC made, which means that every 25 minutes mined 25 BTC.
- 3rd Bitcoin halving: From July 9, 2016, to mid-2020, there will be 2,625,000 BTC generated, on average, every 12.5 minutes will be mined.
- Bitcoin halving 4th: From 2020 to 2024, 1,312,500 BTC will be generated, which means that every 10 minutes, only 6.25 BTC will be mined.
- Bitcoin halving n: No more Bitcoin will be mined.
Two years after Bitcoin peaked at $ 20,000 on some exchanges, the cryptocurrency community is currently focusing on the cryptocurrency’s regenerative potential in the medium term.
Bitcoin halving events, halving rewards, will tend to cause price-related severe changes. With a drop in the value of more than 80% in 2018, the hope that the next halving event in 2020 will create a new era for hodlers is still high.
Historically, Bitcoin halving did not directly affect the price of Bitcoin. Instead, the effect from this event was sometimes felt several months earlier, followed by an upward momentum in the following months.
First halving: November 28th, 2012
The first Bitcoin halving event took place at the block number 210,001. At that time, Bitcoin was still in its infancy when trading on Mt. Gox only reaches a few million dollars a day.
A year before halving, the price of Bitcoin mostly went sideways between $ 5 and $ 15. On the day of a halving, the price of Bitcoin hovered around $ 12, down more than 60% from an all-time high of 2011 of $ 30 with a total market capitalization of about $ 200 million. Bitcoin Hashrate was then only 22 terahashes (trillion hashes) per second.
Bitcoin price only increased sharply in the months after the first round of reward reduction. Moreover, the financial crisis in Cyprus at that time also brought Bitcoin to surpass the all-time high of $ 30, increasing by more than 1,500% to reach $ 200 in March 2013. By the end of 2013, Bitcoin will continue to pump more. Another 500% to reach a four-figure valuation before entering a tiring bear market eventually brought digital assets to a low of about $ 200 in early 2015.
Second halving: July 9, 2016
Bitcoin’s next halving event took place at block number 420,001. In 2016, Bitcoin was much more mature than it was four years ago. Daily trading volume fluctuates around $ 75 million, Bitcoin price fluctuates around $ 400, and the market cap is $ 6 billion. Moreover, BitMEX then offered Bitcoin derivative trading with leverage up to 100 times.
Bitcoin price fluctuated around $ 400 – $ 450 in the first few months of 2016, before halving. In May, the price of Bitcoin surged 65%, reaching an all-time high of $ 750 before settling at $ 650 at a time of halving. However, just a few weeks after halving, the Bitcoin price dropped by 15%, falling to $ 550. As it turned out, the landfill was a fake, with Bitcoin finding plenty of buying support at those levels and up almost 100% to close the year back at an all-time high of $ 1,000.
Bitcoin’s mining network is also growing fast. Bitcoin hash rate has increased by 68,000 times since the previous halving. Looking at the bigger picture and the apparent bull in Bitcoin’s hash rate, it’s no surprise that Bitcoin again went on to eclipse its previous all-time-high prices in the months following its second mining reward reduction.
Halving half the reward, Bitcoin price will go to the moon?
It is expected that on May 14, 2020, when the 630.001th Bitcoin block is mined, the BTC mining reward will be reduced from 12.5 BTC to 6.25 BTC per block. This will be the third halving event.
At this point, hardcoded consensus rule on the Bitcoin blockchain will continue to cut the block reward subsidy in half every four years, until the year 2140 — when the last of the 21 million Bitcoins will be mined into circulation.
The upshot is that over time, fewer Bitcoins will be created each day, lowering the rate of overall inflation on the network. Moreover, this event marks an achievement that Bitcoin will have lower annual inflation rates than many other fiat types. This may not have much immediate impact on prices after halving. But as the inflation rate drops below other competing currencies, argue that Bitcoin miners in a way similar to central bank-style money printers hold less and less weight.
Today, around 1,800 new Bitcoins are minted each day (worth around $ 11 million), but after the next halving, this will drop down to just 900 BTC a day.
PlanB analyst said that Bitcoin’s halving, expected to happen next May, remains one of the strongest catalysts for the future development of King of Cryptos. According to him, the model shows that $ 100k is likely to occur between 2020 and 2023.
#Bitcoin halving .. 5 months to go ?
For miners: production cost of 1 btc will double
For investors: stock-to-flow (unforgeable scarcity, inability to inflate stock) will double pic.twitter.com/JWNbJyil4a
— PlanB (@100trillionUSD) December 1, 2019
Therefore, by historical price dynamics, we can fully expect an upcoming rally.
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