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Bitcoin halving – what is it? When will the halving take place and how will it affect the BTC course?



Features of issue of cryptocurrency number 1 make it competitive compared to conventional currencies. Bitving's halving reduces the BTC miners reward per unit by half.

The next expected date of reduction of remuneration for each created block in the Bitcoin network is May 24, 2020. Starting from this day, 6.25 instead of the current 12.5 bitcoins will be provided for each block.

Such an event occurs on the Bitcoin network every four years. As of March 15, 2019, 17.6 million bitcoins were extracted, which is about 84% of the total cryptocurrency .

How does this affect the price of cryptocurrency?

As the analyst, known on Twitter under the nickname Rhythm Trader, before the first halving, which occurred in November 2012, the price of bitcoin was $ 2.55. A year after this event, she grew to 1037 dollars.

Curiously, after that the cryptocurrency fell almost four times, to 268 dollars. However, the second halving, which happened in July 2016, allowed not only to return to 1037 dollars, but to overcome this level by 2.5 times: Bitcoin rose in price to 2,525 dollars – in July 2017.

The analyst concludes: to buy Bitcoin now, when he has lost about 80% compared with the historical maximum – an option that investors should seriously consider. Indeed, if you pay attention to the current price of Bitcoin, which is about 4 thousand dollars, there is an opinion that in the event of a further fall below 3 thousand dollars for Bitcoin, we will never see.

Anyway, the offer of bitcoins in the market will fall. Now daily miners mine 1800 such cryptoactive assets during the registration of 144 blocks, and after the next halving, this will be only 900 BTC per day.

Rhythm Trader concludes that "the cryptocurrency inflation rate will drop to 1.8%." The analyst notes that this is less than the "ceiling" of price increases, which sets the US Federal Reserve and the European Central Bank (ECB). Meanwhile, some commentators drew attention to the fact that 1.8% is the growth rate of bitcoin-mass, by analogy with the change in the money supply.

However, an increase in the money supply does not always correlate with the way the prices of goods and services change: the latter depends on the savings rate in society, the velocity of circulation of money in the economy, the level of competition, as well as a number of other factors.

Meanwhile, the main conclusion is correct: the bitcoin offer on the market is ultimately limited. In addition, it remains possible to produce additional cryptocurrencies, as the rate of appearance of such assets on the market decreases. According to this indicator, Bitcoin will overtake gold, becoming a more rare asset. After the appearance of another 210 thousand bitcoins “to the world”, the fourth halving will occur, which approximately happens in 2024.

As for the behavior of the Bitcoin price, as confirmed by the analysis of the cryptocurrency investment company Grayscale, it usually rises in price after the halving. But can a rally happen before May 2020?

The fact that the activity among miners is growing is a fact. And if the issue of Bitcoin mining profitability is still relevant, from the point of view of attracting investment in this area, some players show that they can get hundreds of millions of dollars from investors to work in this direction.

China’s interest here is obvious: an additional million mining machines may be put into operation in Sichuan province, and the local population has already sharply increased purchases of bitcoins. Grayscale also notes that investments in Bitcoin-oriented financial products have increased over the past 12 months.

Meanwhile, how the price of Bitcoin will behave, and when it grows up is still an open question. The key point is to maintain the growth in demand for this cryptocurrency, but the real volume of Bitcoin purchase and sale, if not strange, is not so easy to track.

According to The Wall Street Journal, citing a Bitwise study , almost 95% of all publicized information about the Bitcoin trade is "artificially created by unregulated sites." From this, analysts conclude that most of the turnover of this cryptocurrency is falsified, which means that a bitcoin index of dominance can also be called into question.

Meanwhile, it was Bitcoin and his halving law that inspire a certain optimism: nevertheless, for its more than 10-year history, the first cryptocurrency blockchain was not subject to hackers.

Publication date 03/26/2019
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