There are
exactly 250 days before the Bitcoin Halving event. After that, the BTC reward
that miners receive for adding new blocks to the network will be slashed in
half from the current 12.5 BTC down to 6.25 BTC. As this landmark event
approaches, however, the Internet is speculating at large on whether or not
this will cause a surge in Bitcoin’s price. If history is any indicator,
however, it should.
Bitcoin
Halving in 250 Days
In 250 days
Bitcoin will go through its third halving and the supply of freshly minted BTC
on the market will be reduced in half. Interestingly enough, Tech Tic
Technologies explained in depth what the event is and what it means for the
network exactly 250 days ago.
To sum it
up, the rewards that miners are currently receiving for adding blocks to
Bitcoin’s network is will be slashed in half. They are currently receiving 12.5
BTC and this will go down to 6.25 BTC.
This means
that the supply of Bitcoin will be reduced in half. Now, basic economic
principles dictate that if the demand for an asset increases or stays the same
as its supply gets reduced, its price should go up.
Historically,
that’s what happened to Bitcoin’s price following its two previous halving
events. BTC increased by a factor of 10x in less than a year after the first
halving back in 2012 and by more than 400% in the year following the second
halving in 2016.
Not
surprisingly, people are now wondering if the same would happen in 2020 as the
next Bitcoin halving is scheduled to take place in May.
Is
History An Indicator?
Another
interesting thing to consider, however, is if the halving was already priced in
during Bitcoin’s surge in 2019. Of course, it’s rather impossible to know that
for sure, but popular trader Moon Overlord made a correct prediction based on historic
facts back in April.
He outlined
that the cryptocurrency starts pumping around 1 year on average prior to its
halving date.
And we can
see that Bitcoin really did rally hard in May. The price went from around
$5,200 at the beginning of the month to about $8,200 at its end, marking an
increase of more than 57%.
So it
appears that, so far, history has indeed been an indicator for the price,
especially when it comes to the halving events. It remains interesting to see
whether or not we’ll see the same pattern happen again following or before the
2020 halving.
Comments
Post a Comment