Will Investors see Bitcoin skyrocket after the Halving like in 2016 – let’s have a look
Until today, Bitcoin remains the most valued cryptocurrency. Because of that, investors are looking for fair prices to enter the market. But on May 20th, 2020 another Bitcoin halving will occur. In fact of this event, 50 % fewer Bitcoins will be awarded after completing a block. Also, the whole Blockchain won’t be taking a step back – forever. So let´s have a look at what to expect from the upcoming halving event. According to the experts from Coin-Ratgeber.de, the upcoming halving may influence the whole market - more volatility and a potential upswing expected.
Bitcoin is a deflationary currency
Basically the Bitcoin Blockchain is limited to 21 million BTC. That means, that the whole blockchain is based on a model of deflation. In fact less Bitcoins will be generated over time. Actually after the last Bitcoin is mined in 2140, the supply of new coins will end.
In comparison to that, fiat currencies are based on an inflationary model. Because of that, banks can print extra units of the specific currency. So in the end we can see that Bitcoin is more scarce than any known fiat currency. And as we learn as a kid, the more scarce an object is the more valuable it appears.
Why is mining important for Bitcoin?
The second indicator which influences the Bitcoin price is mining. As most of the other currencies start to deploy a proof-of-stake algorithm, Bitcoin still relies on the proof-of-work model. Even if proof-of-work seems to be old-fashioned, it works just fine for the Bitcoin blockchain.
As defined in the Bitcoin code, a new block of transactions is solved every 10 minutes. In fact of that, new Bitcoins are created in the short term of just 10 minutes as well.
When the Bitcoin blockchain started back then in 2009 and the price per coin was less than a dollar, miners earned as much as 50 BTC for completing a new block. The current block reward is 12.5 BTC still. The difference between the block rewards can be traced back to the halving events which took place twice already.
The halving is a feature, which is programmed into Bitcoin and occurs after completing 210.000 blocks.
The next halving is estimated to take place on the 12th of May. In fact, miners will only earn as much as 6.25 BTC every 10 minutes.
The influence of the halving on Bitcoin
Let’s take a step back. We already had two halving events before. The first halving took place on November 28th 2012. At this point, BTC was worth around 11 USD. Just one year later the Bitcoin’s price noted at 1,100 USD. Only one year after the first halving Bitcoin had skyrocketed and realized a growth of around 100,000 %. Eventually, BTC fell to around 220 USD after that and remained below 1,000 USD, but still, the price was still up to 2,000 % from its initial price.
The second halving, which took place in July 2016, led to the great bullrun of 2017. While BTC noted at around 600 USD – 700 USD before the halving, the beloved cryptocurrency reached a skyrocketing price of 20,000 USD during the bullrun. Also, BTC came back to less than 4,000 USD in January 2019. We recommend visiting our real-time coin price overview.
What to expect from the third halving in May 2020?
With the next halving taking place in less than three months, the biggest question for investors is what to expect from the Bitcoins price?
Since the supply of new BTC for completing new blocks will decrease in fact of the halving, we expect increasing BTC prices.
Following the previous trends, investors will see a new all-time-high. The Bitcoin price could likely be several times higher than before. Even prices of more than 100,000 USD might be hit.
According to Kraken CEO, Jesse Powell, a price of more than 100,000 USD seems possible.
When I hear people talking about a Bitcoin "correction" I'm thinking $100k, maybe $1m. That's what's correct.— Jesse Powell (@jespow) June 26, 2019
Also, Anthony Pompliano, co-founder of Morgan Creek Digital Assets, believes in increasing Bitcoin prices.
"Supply-Demand economics remain valid. They are a great way to determine the market price. So, if the demand for a fixed-supply asset increases, we continue to see price appreciation.” – Anthony Pompliano
The impact of the halving on altcoins
Even though Bitcoin is the most known cryptocurrency, the halving will likely have an impact on other currencies as well.
During the last halving we could see the outrageous increase of Bitcoins price. More than that altcoins started skyrocketing as well. And taking a look at the market we can see that the crypto ecosystem has significantly matured. New services occurred and buying, holding and selling cryptocurrencies is easier than ever before.
Also, most people have heard of Bitcoin and cryptocurrencies. This may lead to the fact that altcoins will skyrocket as well this year. According to the experts from Coin-Ratgeber, it’s a good decision to own some crypto to diversify their own portfolio. Therefore they introduce to crypto enthusiasts how to buy cryptocurrencies. Since the halving is only three months away, buying cryptos seems to be a fairly good alternative for investing your money.
Until today, Bitcoin remains the most valued cryptocurrency. Because of that, investors are […]