October 1, 2022

Bitcoin halving - what is it, when will it take place, how will it affect the rate

Bitcoin halving - what is it, when will it take place, how will it affect the rate

Features of the issue of cryptocurrency No. 1 make it competitive in comparison with conventional currencies. Halving Bitcoin halves the reward of BTC miners per block.

Next Expected Reduction Dateremuneration for each block created in the bitcoin network - May 24, 2020. Starting this day, 6.25 will be provided for each block instead of the current 12.5 bitcoins.

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

Bitcoin halving - what is it, when will it take place, how will it affect the rate

How does this affect the price of cryptocurrency?

According to an analyst known on Twitter underNick Rhythm Trader, before the first halving, which occurred in November 2012, the price of bitcoin was $ 2.55. And a year after this event, it grew to 1037 dollars.

Curiously, after that, the cryptocurrency fell in pricealmost four times, up to $ 268. However, the second halving, which happened in July 2016, allowed not only to return to 1037 dollars, but to overcome this level 2.5 times: bitcoin eventually went up to 2525 dollars - in July 2017.

Bitcoin halving - what is it, when will it take place, how will it affect the rate

The analyst concludes: buying bitcoin now that it has lost about 80% compared with the historical maximum is 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 cheaper than 3 thousand dollars for bitcoin, we will never see it.

Bitcoin halving - what is it, when will it take place, how will it affect the rate

Be that as it may, the offer of bitcoins on the marketwill fall. Now, miners extract 1,800 of these crypto assets daily when 144 blocks are registered, and after the next halving, it will be only 900 BTC per day.

Rhythm Trader concludes that “inflation rateon cryptocurrency will decrease to 1.8%. ” The analyst draws attention to the fact that this is less than the “ceiling” of price increases set by 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 is not alwayscorrelates with how prices for goods and services change: the latter depends on the rate of saving in society, the speed of money circulation in the economy, the level of competition, and also on a number of other factors.

Meanwhile, the main conclusion is correct: the supply of bitcoins on the market is ultimately limited. In addition, it remains possible to produce additional cryptocurrencies, since the rate of appearance of such assets on the market is slowing. According to this indicator, bitcoin will overtake gold, becoming a rarer asset. After the appearance of another 210 thousand bitcoins, the fourth halving will take place, which will approximately happen in 2024.

Bitcoin halving - what is it, when will it take place, how will it affect the rate

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

The fact that activity among miners is growing isfact. And if the issue of profitability of bitcoin mining is still relevant, then from the point of view of attracting investments 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: in Sichuan, an additional million mining machines may be put into operation, and the local population has already sharply increased purchases of bitcoins. Grayscale also notes that investments in Bitcoin-oriented financial products have been increasing over the past 12 months.

Bitcoin halving - what is it, when will it take place, how will it affect the rate

Meanwhile, how will the price of bitcoin behave, andwhen it grows up - this is still an open question. The key point is the continued growth in demand for this cryptocurrency, however, the real volumes of bitcoin purchase and sale, as it is not strange, are not so easy to track.

According to The Wall Street Journal with referenceAccording to a Bitwise study, almost 95% of all published information on bitcoin trading is “artificially created by unregulated sites.” From this, analysts conclude that most of the turnover of this cryptocurrency is falsified, which means that, for example, the Bitcoin dominance index can also be called into question.

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

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