The bitcoin halving is in two weeks

In less than two weeks something special will happen: the bitcoin halving. That is a rare and important event that happens once every four years, with inflation in the bitcoin economy halving. Meanwhile, governments worldwide are injecting new regular money into the economy on a large scale due to the corona crisis. There is more and more regular money on the market, while the supply of new bitcoins is decreasing.

The bitcoin halving

In about 12 days, the 630,000th bitcoin block will be mined. That will be around May 12. From that moment on, something special happens: the blocks that the miners find afterwards will only contain half as many bitcoins as before. This mechanism is pre-programmed to happen every 210,000 blocks and only happened twice before, in 2012 and 2016. At the moment, the block reward per block is still 12.5 BTC, but after the upcoming halving it will decrease to 6.25 BTC per block.

Bitcoin halvings are much talked about because they ensure that inflation in the bitcoin economy continues to decrease. Bitcoin mining is the only way new bitcoins come to the market and the bitcoin market works like any other market based on supply and demand. When the supply of new bitcoins on the market shrinks but the demand remains the same, it can have economic consequences and affect the price. We wrote a little more about it in a previous article.

Corona crisis

However, due to the corona crisis, something is still going on. Governments worldwide are doing the opposite with regular money to fight the crisis: new money is being created on a large scale and pumped into the economy. The quantities run into the thousands of billions – if you try to count, you will soon lose sight of the wood for the trees. Japan trumps all others, even recently announcing “unlimited resources”.

So more and more regular money is coming onto the market, while the supply of new bitcoins on the market is constantly decreasing. Therein lies one of the properties that make bitcoin economically interesting and it is one reason why some bitcoiners believe that the bitcoin price will be higher in the future. Bitcoin halvings are therefore something to look forward to for many bitcoiners.

Perhaps no direct consequences

Bitcoin halvings have also been cause for optimism in the past, but the economic effects were not immediately noticeable. Bitcoin miners are only a small part of the total supply on the market, because most bitcoin trading is done with bitcoins that circulate longer.

At the moment, miners worldwide can mine 1800 BTC per day, which at the current price is about ??15 million in new bitcoins that the miners can sell a maximum of per day. However, the total daily bitcoin trading volume is several billion euros and the amount of freshly mined bitcoins is therefore only a small part of it. It is therefore unlikely that the economic effects resulting from the bitcoin halving will immediately penetrate the market. That will probably be a slower process.

Source: Brainless Tales

Any price movements leading up to, during or immediately after the halving are likely the result of speculation. Those who expect to make an easy profit by responding to the news may therefore be disappointed, because there may be many other speculators and if everyone is ready to sell immediately after the halving, the price could well fall. However, nothing can be said for sure and anything can happen. After all, today’s economic conditions are completely different and past results are no guarantee for the future. It therefore remains exciting to see what will happen, but it may not hurt to be prepared for volatility. Whatever you do: be careful, be sensible and HODL on!

The chart below shows the price of bitcoin with the previous bitcoin halvings highlighted. Various timers can be found on the internet that count down to the exact moment.

Above: A chart showing a logarithmic representation of the weekly bitcoin price in US dollars. Source: tradingview.com

s: www.thehalvening.com

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2024 Cryptocoin Budisma.net