Bitcoin’s halving consumes investor interest in the industry. What is Bitcoin halving and what does it mean for the cryptocurrency? In this article, I will explain to you what is bitcoin halving and then I will present to you the five scenarios regarding Bitcoin’s future.
What is Bitcoin Halving?
Every ten minutes, new Bitcoins are mined from the Bitcoin network. During the first four Bitcoin years, the number of these Bitcoins produced every ten minutes was 50. Every four years that number was divided by two. In 2012 the number of Bitcoins produced fell from 50 to 25. In 2016, it also fell from 25 to 12,5. Now, It will drop from 12,5 to 6,5 Bitcoins produced every ten minutes.
- Bitcoin halving commencing date: 18/5/20
- Bitcoins produced: 6,5 every ten minutes.
1-A Handful of Corporations could Control Bitcoin
The miners will see a sharp fall in their rewards. (50%) This will be due to halving, or could also be due to an unexpected drop in Bitcoin’s value. This could cause heavy losses to mining corporations. As a result, their owners will have no option but to cease operations.
In addition, the rewards decline could cause further harm, as the verification of each block could take hours. However, I don’t think that scenario has any chance to take place. We already had two halvings in the past and we also had up to an 80% drop in Bitcoin price. Today’s Bitcoin miners are large corporations, fully professional thus, it’s not easy to just “pull the plug”.
2-Bitcoin Price Increase
Many economists and investors consider Bitcoin to be a commodity and thus, according to economist’s Safedean Ammous algorithm Stock-to-flow, including other predictions, they all agree its price will see a substantial increase. According to the Stock-to-flow algorithm, Bitcoin will touch the $100,000 mark at least one time.
3-Investors Buy the Rumors and Sell the News
This is a possible scenario, due to great anticipation for substantial gains after Bitcoin halving. When investors see chances for substantial gains, they always jump on the bandwagon and once they have profited enough, they are the first to sell.
It is common practice. When there is a big event they will always be there and they will leave exactly when market enthusiasm is at its highest level.
There was a similar event in Litecoin’s halving. Litecoin lost 2/3 of its value only four months after its halving. Nonetheless, at that time most cryptocurrencies suffered losses. The fact is many investors have adopted a similar strategy because Bitcoin’s halving has been heavily promoted.
4-Massive Bitcoin Sales from Miners
There is no doubt halving will cause an increase in Bitcoin production costs. If Bitcoin’s value is equal to or below mining costs, miners have no option other than selling. If not, they will have to deal with heavy losses.
IIn case Bitcoin’s value drops suddenly and sharply as it did in March 2020 then, the fall in miners’ rewards along with Bitcoin’s value will decline. That could lead to a massive Bitcoin sale. A massive Bitcoin sale means further value decline.
5-No Significant Changes
According to many analysts, Bitcoin’s halving will not have a significant effect on its value. Daily fluctuations between 1% and 5% are usual, whereas further fluctuation will definitely be seen as in effect. We might not be able to see this immediately, but after a few months, the data will be there.
Final Words
What will actually happen to Bitcoin’s price after halving remains to be seen? There will be fewer Bitcoins produced, that is certain, we do not know whether Bitcoin demand will stay the same, will drop, or rise.
Will miners continue to operate with new more efficient hardware or they will have to cease operations? Some analysts argue halving has already passed in the Bitcoin market.
My view for halving is that long term, it will have a positive effect not only on the Bitcoin market but on the cryptocurrency market as a whole. Most predictions are just predictions unfortunately, there is not enough data for us to form a definite view, especially now in the middle of the covid-19 pandemic.
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Hi
It is interesting to read about the ups and downs of Bitcoins and how there production has continued to halved. I can see how supply and demand will continue to dictate how many are produced and the future selling price. I have thought about investing in bitcoins but the contradictive nature often given by experts have put me off
I also think the uncertainty can put people off and let us say it is not for the faint hearted. The question is is it an investment for now or in the future, only God knows?
Thank you for an interesting article.
Antonio
Hi Antonio, you either love Bitcoin, or hate it. The time for Bitcoin to prove those speaking against it that they are wrong is approaching. Actually it will be make or brake for Bitcoin. Therefore, investing in Bitcoin and other cryptos should be done with money you can afford to lose. If you lose it you don’t care, or you can make a killing out of it.
I really think that investing in Bitcoins is the way to go in the future, so thanks for this interesting article. But I honestly have no clue where to start . How much money would you advice me to invest the first time and how can I even do this? Are there any courses or lessons out there on the internet who goes more in detail about this ? If you have never invested before in anything, could you still get experience in it ? Thanks so much for this article !
Hi Lizzy and thanks for commenting in my site. If you want to invest in Bitcoin don’t put all your savings there, just a small percentage. Bitcoin is bullish now, but it is also volatile. You can start with $200. Before you invest in Bitcoin, you will need a Bitcoin wallet. On the net you can find all the information you need about all types of investment. Beware though, there are a lot of scams associated with cryptocurrencies.
To be honest I was not fully aware of the Bitcoin halving taking place currently so I appreciate such a thorough explanation here. I could be wrong but to me Bitcoin having sounds like a stock split if we were to make as close a comparison as possible. Good to know that many analysts don’t see much of an effect taking place due to halving. With so much uncertainty I agree it can be impossible to know what will happen, but what is known is that there are people who have made a killing off of Bitcoin. This is an investment that has risks and rewards, perhaps more volatile than with other commodities, and it will be interesting to see where things will go from here. Thanks for the info on halving, very enlightening!
Thank you for taking the time to write a comment. Yes Bitcoin as all cryptos is volatile. However, as you noted a number of people have made a killing out of Bitcoin. I think Bitcoin will remain volatile but it still has room for further value increase.
Helooo a big thanks to you for sharing this insightful and informative article on what Bitcoin halving is and how hard should be next … This article is filled with so much quality and useful content it will really be Helpful to a friend of mine who trades Bitcoin, u will forward this to him right away I am pretty sure he’ll appreciate it.
Bitcoin is at the crossroads right now. If the halving succeeds then nothing can stop it. That will also affect all other crypto currencies. I am optimistic about Bitcoin. I think this halving will show the world that Bitcoin is here and it means business.
Hello there this is a very wonderful read. I happen to be a trader of various crypto currencies and as to bitcoin halving and its effect on the value and continuity of bitcoin market I can say for sure that there are too many variables that affect the bitcoin market to let just one variable have a decisive role in the shift of the bitcoin value. So rest assured bitcoin value wont dwindle down just cause of bitcoin halving.
There is a lot going for Bitcoin. More and more business accept Bitcoin as payment and more people trust it. As trust grows so will it price. I do not see it as a short term investment.
Hey nice article you have there. Thanks for sharing such a timely information. As a new Bitcoin trader, I have been searching for platforms, articles, videos that I can use to expand my knowledge of the trading. Having gone through this article and the various tips that was highlighted, I must say I have learnt a whole lot of Bitcoin halving, thanks for that, expecting more of Bitcoin lessons.
Thanks for taking the time to leave me a comment. Its not easy to find independent and balanced information regarding Bitcoin and other cryptocurrencies. There is a number of websites who reject Bitcoin for no particular reason. At the same time there is also another group of websites and who only see the positives. Here you will get independent and balanced information.