Bitcoin halving in 2020 means a drop of new bitcoins created per block from 12.5 to 6.25 BTC. These scenarios can be expected.
With bitcoin halving, the supply of new bitcoins is halved. Instead of 12.5 BTC, miners now only receive 6.25 BTC per successfully mined block. This supports the deflationary supply structure that Satoshi Nakamoto designed as an alternative to fiat currencies. But what happens afterward? Three possible scenarios for bitcoin halving.
Scenario 1: The Bitcoin price will rise after the halving
The Bitcoin Halving meant in the past – at least in the long-term horizon – always an increase in the Bitcoin price. It took some time for this event to be “priced in”. But as a result, there were always bull runs at Bitcoin. The basic market mechanisms prevailed here: supply and demand. Demand increased, however, the supply of new bitcoins decreased (but not the supply, which nevertheless increased). As a result, the Bitcoin price rose enormously. This halving bitcoin inflation rate also will drop to 1.8% making bitcoin inflation rate lower than any fiat currency.
1. Halving: The first Bitcoin Halving took place on November 28, 2012. The reward for miners halved from 50 BTC to 25 BTC. The Bitcoin price was $ 12.35 at the time of the halving. After 150 days, it reached $ 127. It peaked in the phase between Halving 1 and Halving 2 in December 2013, just under a year later, at around $ 1,038. The growth thus reached a maximum of over 9,300 percent.
2. Halving. The second Bitcoin Halving took place on July 9, 2016. The halving was from 25 BTC to 12.5 BTC. At the time of the halving, the Bitcoin price was $ 650.63. 150 days later, it was at $ 758.81. The Bitcoin price peaked on December 17 at just under $ 20,000 after about 1.5 years. Here it was “only” almost 3,000 percent growth.
Scenario 2: Nothing happens after bitcoin halving
It is not out of the question that nothing or nothing great will happen immediately after the Bitcoin Halving, at least as far as the Bitcoin price (BTC) is concerned. There are indicators that the supply shortage stands for an increased price. Above all, the stock-to-flow ratio, with which one can calculate the rarity of an asset, gives positive signals. Nevertheless, the halving may only be priced in gradually. In the past, it always took a while for the Bitcoin price to rise.
Scenario 3: The Bitcoin price will go down after the halving
It can be assumed with some certainty that word has got around among investors that halving BTC supplies in the past has led to an increase in Bitcoin price levels. Therefore, it can happen that there is already a proportion of speculators who are betting on a bitcoin price increase before the event. If this happens, they would sell their Bitcoin more after the halving, the Bitcoin price could fall.
The same applies to Bitcoin miners. The sharp increases in the hash rate, i.e. the computing power that is used to mine new bitcoins, suggest that miners have increasingly tried to stock up on “cheap” bitcoins. Finally, we remember that after halving, they only get half as many Bitcoin units for successfully mined blocks as before. After the halving, they could increasingly put them on the market for sale and thus push the Bitcoin price down. Here it can be assumed that the hash rate will drop again after the halving, since the competitive situation will be somewhat limited.
The current Bitcoin price at the time of writing is $6,240.
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