Will Bitcoin’s Price Rise after the halving?
Our planet is currently experiencing some highly turbulent times, both from social and economic standpoints. Economy is hurting and assets are losing value by the day. Only one commodity in the world hasn’t experienced a destructive force brought upon by the raging pandemic. Bitcoin has been going strong since the beginning of the new year, witnessing exponential growth in the last couple of days. One of the key factors might be the upcoming event of Bitcoin Halving, which is a game-changing affair for the popular virtual currency, as well as for all the investors and enthusiasts of this digital asset.
What is the Bitcoin Halving and the reason behind it?
After Every 210,000 blocks have been used in the blockchain, Bitcoin goes through the process of “Halving”. This protocol was integrated into the core of BTC by the creator; Satoshi Nakamoto, to cut the supply of new bitcoins in half, together with block production rewards for the miners. Each time the Halving occurs, miners instantly receive 50% less BTC for verified transactions. There’s a clever logic behind these processes. Bitcoin is a unique cryptocurrency, especially if we look at the fact that only 21 Million BTC will ever exist. That’s the threshold set by the creator himself and halving is the tool to ensure a smooth conclusion of the production of new coins.
The main reason behind this process is to make BTC safe from inflation, like the one plaguing the FIAT Currencies. For example; the Federal Reserve of the United States can quickly and easily produce more Dollars to regulate the economy, which results in imminent inflation and recession in extreme cases. In order to eliminate any possibility of such processes, Satoshi hard-coded the upper cap of BTC, so no entity in the world can ever inflate the supply.
Halving is due on May 12th, how is the world reacting?
If we treat the obvious facts as evidence to the upcoming events, it’s beginning to be crystal clear – how the finance world will react to the Bitcoin halving. First and foremost, looking at the price of BTC, a clear picture emerges. A mere 2 weeks ago the price of a single Bitcoin was stably circulating around $6000. Today, just days before halving, the price sits at more than $9K.
According to the search data available in the last month, people are frantically “googling” information about “Bitcoin Halving” and the countries with the most “searches” are; Austria, Estonia, Slovenia, Netherlands and Switzerland. Many of these people are starting to invest in virtual currencies and that might be the reason behind a 50% price rise in the last 2 weeks. If this correlation is correct, the price could soon be greater than the record breaking $20K Price tag of BTC in 2017.
Will the Price of BTC Rise After Halving?
There are numerous theories regarding the future – after the BTC Halving and about how it will affect the price of Bitcoin, but most predict the growth of the value. It’s universally believed that the price of Bitcoin is going to imminently rise. First and foremost, it’s going to be due to the new market entrants. The tightening of numbers will cause more buying and what happened in the past will surely happen again. As an example, we can look at the first halving which took place in 2012, when the price of BTC went up to the $1000 mark for the first time. Curiously, during the second halving, the price went up to $2000. One of the experts of Cryptocurrencies, Chamath Palihapitiya (Former Facebook Executive) believes that there is a 5 to 10% chance that the single Bitcoin will eventually be worth millions of Dollars, considering the current economic climate.
Contributed by George Khmelevski