Bitcoin’s block reward halved for the second time last week, from 25 to 12.5 bitcoins. The event, commonly referred to as “the halving” (or sometimes: “the halvening”), was a key moment in Bitcoin’s history. Such halvings are scheduled to occur once in about every four years, and they ensure that no more than 21 million bitcoins will ever be in circulation.
Unsurprisingly, the halving was highly anticipated, and predictions on how the event would impact the Bitcoin ecosystem abounded.
One week since the second halving, this is the aftermath.
Price
Perhaps the most debated issue leading up to the halving concerned Bitcoin’s exchange rate. As Bitcoin’s price is based on supply and demand, some thought a cut in supply would naturally lead to an increase in price. But since the halving did not come as a surprise, others expected the market to have anticipated the supply cut, and would have already priced it in. Others believed that an anticipation of a price increase could actually have resulted in a bit of a bubble, and therefore expected a fall in price.
Now, one week after the halving, it’s clear the price has not moved substantially – at least not by such an extent that it is obvious the halving is the cause of it. Hovering around $675, compared to about $650 at the time of halving, the exchange rate did increase by a couple percentage points. But that’s not unusual for Bitcoin.
It can, however, be argued that the price increase as a result of the halving did occur in anticipation of the event ‒ that the halving was indeed anticipated and calculated in. Bitcoin’s exchange rate rose about 50 percent (from $430) in the three months ahead of the halving, and even more than doubled (from $300) compared to a year ago.
And, of […]
