Bitcoin Halving explainedIn a nutshell, Bitcoin Halving means that the amount of Bitcoin that is rewarded to miners for mining new blocks, will be cut in half. Bitcoin Halving occurs every four years and the 2020 Halving event will be the third time the current block reward is cut in half. It is said to take place in May 2020. Currently, the block reward is 12.5 Bitcoin every 10 minutes but after the Halving event, this amount will be reduced to 6.25 Bitcoin.
After Halving, fewer Bitcoins can be mined and the digital currency will become increasingly scarce. Remember Bitcoin has a maximum supply cap of 21 million as per its built-in algorithm. No more Bitcoins can be created or mined. In all likelihood, the last Bitcoin will be mined in 2140. Did you know that the first Bitcoin block reward was 50 BTC every 10 minutes?
Digital currencies are truly unique. Fiat currencies on the other hand, work on an inflationary model whereas central banks can print extra units as they see fit. This is not the case with digital currencies such as Bitcoin.
Why is Bitcoin Halving important?The good news is that with increasing scarcity, the price of Bitcoin is likely to increase in value. The coin’s supply will be limited which could see an increase in demand.
If history is anything to go by, Bitcoin enters a bull trend roughly one year before the scheduled Halving event.
Bitcoin Halving 2020 will occur on 16 May (at the time when this blog was written) of the same year when it reaches block number 630 000. See the Bitcoin Block Halving Reward Countdown. There is roughly 250 days left to the event.
Price analysis – Historic Bitcoin Halving dataCryptocurrencies tend to repeat historic patterns. With that said, let’s take a look at what happened with the price of Bitcoin during the first two halving events.
Bitcoin Halving 2012The first Bitcoin Halving took place on 28 November 2012. Prior Bitcoin cost about $11 but approximately 513 days after halving, in 2013, the price surged to $1 100. Bitcoin grew 100x. However, shortly afterwards, the price corrected to about $220.
Bitcoin Halving 2016On 9 July 2016, Bitcoin Halving took place for the second time and went from the $600 – 700 mark to over $20 000 during the December 2017 bull run. Bitcoin’s price corrected to about $3 900 in 2019.
Bitcoin tends to form a pattern before and after halving events. About a year afterwards, the price booms only to have a major correction before it repeats the cycle.
So, what can be expected from Bitcoin Halving 2020? In all likelihood Bitcoin may follow previous trends and could potentially reach a new all-time high after the event. On the other hand, with the changing economic climate, Bitcoin may not follow previous patterns. No one can know for sure. Until then, be sure to accumulate Bitcoin and your favourite altcoins on AltCoinTrader. South Africa’s favourite exchange recently cut trading fees by 50%!