Introduction
Bitcoin halving is a significant event in the world of cryptocurrency. It is a process that reduces the rate of new Bitcoin being created by cutting the reward miners receive for verifying transactions on the blockchain. This process occurs every four years and is an important feature of the Bitcoin protocol. Halving has a direct impact on the Bitcoin network, affecting supply and demand dynamics, miner economics, and the overall price of Bitcoin. In this article, we will discuss what Bitcoin halving is, why it occurs, and how it affects the network and the market.
The first two halvings in the bitcoin network were accompanied by increased volatility of the coin over the next 1-1.5 years: the price of the asset could rise from $11 to $1,100 or from $230 to $20,000 – and fall 5 times. Regarding the impact of the third halving on the price of the flagship of the crypto market, experts’ opinions are divided. Some expect growth, others – the absence of significant changes.
At Digital Asset Research considerthat in May 2020 bitcoin could rise to $60,595 per unit. The assumption is based on an analysis of the behavior of the price of bitcoin in cycles between previous halvings. It turned out that at the end of the cycle, it grows due to the growth in demand for cryptocurrency and reaches peak values in the first third of the cycle, each time rising to a new historical maximum. The researchers believe that if the pattern they identified repeats, a new peak in the price of bitcoin will occur in September 2021, and at the next halving in 2024, it will reach $732,256 per unit.
The German bank Bayerische Landesbank came to the conclusion that the upcoming halving will allow bitcoin to get closer to gold in terms of such an indicator as the stock-to-flow ratio (Stock-to-Flow, S2F). Gold has an S2F of 58 and will not be much higher by May 2020, while Bitcoin will rise from 28.5 to 53, making the price of $90,000 per unit possible. If the model proposed by the bank’s specialists turns out to be correct, the 2024 halving will increase the strength of bitcoin to an unprecedented level in human history: a level of over 100.
On the other hand, analysts at the American company Strix Leviathan notethat on the eve of the halving, the media actively recommends users to hold bitcoins, and the rise in prices in the associated period can be explained by the illusion of an increase in the value of the asset against the backdrop of increased speculation.
Conclusion
The Bitcoin halving is an event that occurs roughly every four years and is an integral part of the Bitcoin protocol. It is a feature that keeps inflation in check and increases the scarcity of Bitcoin, which makes it an attractive asset to invest in. The halving also serves to reduce the rewards miners receive for verifying Bitcoin transactions, thereby providing an incentive for miners to continue providing the network with security. As the halving continues to move closer, the Bitcoin network will become more secure, and the emergence of a more robust digital economy is likely to follow.
FAQ
What is Bitcoin Halving?
What is Bitcoin Halving?
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