Hi everyone. Today, we will answer 3 of the most frequently asked questions about the halving of the Bitcoin in 2020.
- What is the halving of the Bitcoin and what is it necessary for?
- How did the Bitcoin price change after previous halvings?
- What will happen to the Bitcoin after the halving-2020?
What is halving?
Halving is a decrease in the miners' reward per mined block. If now miners get 12.5 BTC, after the halving, they will earn 6.25 BTC. The main aim of halving is to create a deficit of the asset and reduce inflation.
This event happens every 210,000 blocks or roughly every 4 years. Halving is considered to be a crucial event for the BTC; they say that it is halving that promotes the vigorous growth of the leading cryptocurrency.
Halving will happen until the reward per block reaches the smallest Bitcoin unit - 1 Satoshi; then the miners' reward will fall to zero, and they will only get paid for transactions.
The current event is planned on block 630,000; the reward for mining a block will be decreased from 12.5 to 6.25 BTC.
What is the idea of halving?
As we mentioned above, the main aim of halving is to create a deficit of the asset and limit inflation. Thanks to halving, the amount of the cryptocurrency will not exceed 21 million coins. Compare it to gold mining: each mined gram makes further mining more complicated, hence, the price of gold itself will grow due to its mining becoming more expensive.
Same with the Bitcoin: the supply is limited by 21 million coins, hence, each mined block makes the next one more expensive.
How did the previous halving influence the Bitcoin price?
There were two halvings. The first one happened on November 28th, 2012: the reward per block decreased from 50 to 25 BTC.
At the moment, the Bitcoin price was at $12.3; it never decreased, and in January 2013, it renewed the high of $16.50. The cryptocurrency kept growing aggressively until April 2013; the price tested $259, then renewed the highs in November 2013 and tested $1,165. Then a significant correction followed.
The second halving happened on July 9th, 2016, when the reward decreased from 25 to 12.5 BTC. That time, the price fell from $660 to $465. It only managed to renew the high of $780 in December 2016, i.e. 6 months after the halving. After that, it grew aggressively to the all-time highs in December 2017, and only then a correction followed.
How much will the Bitcoin cost after the halving?
Judging by the analysis of the previous halvings, we may suppose that after the current halving on May 11th, 2020, the renewal of the highs near $20,000 will happen in 4 to 6 months.
Right after the halving, we should not expect serious growth, the Bitcoin may even decrease and test the nearest support level, currently laying near $4,500. A new high, after which a correction will follow, may be expected no sooner than 18-24 months later.
Note that this is just a forecast, and the price rarely moves in strict timeframes; always keep track of the market situation.
Halving is a two-times decrease in the miners' reward per block. It is carried out to preserve the deficit of the coin and prevent its mining from becoming more expensive than the con itself.
There were 2 halvings in Bitcoin history: in 2012 and 2016. After these events, the price never grew steeply, new highs were broken away 4-6 months later, and a reversal downwards from the new peaks happened 12-18 months after the halving. We are waiting for a new halving on May 11th, 2020.
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