As the bitcoin halving is nearing, the buzz in the community has intensified and is leading to some interesting debates. A few predict that BTC’s price will sky-rocket and some argue that it will be another disaster for the investors.
In the previous blog post we have outlined the idea of halving from a broader perspective, give it a quick read before diving in deep. In this second part of the series, ChangeHero brings you a detailed analysis of the Bitcoin Halving events, insights and expectations of the upcoming event the next year.
Developed by Satoshi Nakamoto in the year 2009, Bitcoin is arguably the world’s first decentralized currency. In order to ensure, even distribution of the new bitcoins, he created an algorithm that rewards miners with freshly mined bitcoins. Initially, the reward was set to be 50BTCs per block but has some strings attached. For every 210,000 blocks or roughly four years, the mining reward would be halved till all the 21million bitcoins were mined. This was done to keep the value of the coin intact and maintain the demand. Check the previous article for a detailed explanation of this concept.
The halving premiere
It is important to consider the prior performance of the bitcoin before the halving event. A year before the first-ever halving event, BTC was trading at around $3 and continued to grow in the following. During the initial halving event on November 2012, BTC was traded just above $12 and the reward of 50 BTC per block was halved and set to 25 BTC per block.
Although there were no immediate effects on the coin after the halving event, BTC continued growing in the subsequent year. There was a short bear market in June and the price started gaining quickly in August. Bitcoin crossed the thousand dollar mark in November 2013. At that time, BTC was traded at over $1119.80 before bears hit the market.
A similar sister
The second halving event gained more attention from the community and many expected that it would yield a similar result. The successive event has taken place in July of 2016 where the block reward was further reduced to 12.5BTC per block. The market was bearish in the year 2015 and in July, BTC was traded at just above $250. The price grew considerably in the following months and was traded at over $600 at the time of the second halving event.
Similar to the previous halving event, there were no immediate changes in the price of the bitcoin. However, the BTC continued to grow steadily without any major fluctuations in the following months. 2017 is arguably the year of Bitcoin and we all have a clear idea of what happened. Bitcoin was on a massive bull run that started in July 2017 and reached an all-time high of $20,089 on 17th of December the same year.
Considering the first two halving events, a few common threads can be identified. There is a bearish season before the halving in the two cases. A noteworthy point is that there is no immediate effect on the price of Bitcoin right after the halving. In both cases, the price hit new highs after a year. From these patterns, it can be said that halving event is more of a catalyst to the beginning of a new bitcoin bull run.
The next bitcoin halving might probably take place in May 2020 where the block reward will be reduced to 6.25BTC per block. As of writing, the current block height was 599,586 with 30,414 blocks left to the third halving event.
2018 has been a bearish market for the crypto and fall in line with the former events. In early 2019, the price began to surge and faced some fluctuations recently. These signs indicate that the event might probably repeat history.
Talk of the town
The event has garnered a great a lot of traction in the community and has become the topic of debate. We see a wide range of opinions about the halving event in the community. Co-founder of Bitman, Jihan Wu suggested that the future of the bitcoin would be bleak after the halving. He also added that the recent Litecoin Halving is an example and bitcoin would be following the same. On the other hand, Matthew Roszak, chairman of Bloq, was highly optimistic about bitcoin’s future and predicts that it would be traded at $100,000.
Some of the most notable analysts, experts and enthusiasts in the blockchain community has crunched the number and came up with the quite promising figures. Well-known trader and analyst, Rekt Capital has estimated that the previous two halving events resulted in 13,378% and 12,160% rise in the price of the bitcoin respectively. Based on the stats, the analyst even predicts that one bitcoin would be worth over $400,000.
Besides that, Crypto Rand has also suggested that halving events lead to a massive surge in the price of the bitcoin. Another crypto enthusiast named Joseph Young hints that halvings follow a certain pattern and in a year after the event, the price will reach heights. These two interesting patterns fall in line with our findings as mentioned earlier.
The other side of the fence
While the enthusiasts and investors are counting the numbers, miners are gearing up to tackle the consequences of the act. With the decrease of the block reward, it would it more challenging to maintain the farms and pay the bills. It would be devastating for the miners if the price of the bitcoin plunged after the halving. Jihan Wu suggested that if halving doesn’t affect the price of the bitcoin then miners should work on improving the efficiency of the equipment and the computing power to stay in the game. He also added that despite the dilemma, it is the right time to invest in crypto mining.
Rehash, pun intended!
Bitcoin halving is undoubtedly a mega event in the crypto sphere and has the potential to change the course of the industry and impact the lives of the investors, miners and the community as a whole. ChangeHero believes that the upcoming bitcoin halving event will lead to a bull run in the near future. It is also fair to acknowledge that irrespective of the outcome, debating this topic would boost awareness in the community and stimulates the mass adoption.