Bitcoin’s highly anticipated halving is just days away and is arguably the biggest crypto economic event this year. There are a multitude of questions surrounding this highly anticipated event and the way in which it will affect Bitcoin’s price.
What is the Bitcoin Halving Event?
Bitcoin is sometimes compared with gold as, unlike fiat currency, it has a limited supply. When 21 million Bitcoins have been produced, the network will stop producing more.
This means that with the upcoming halving, the already limited supply of Bitcoin will be further stretched.
The Bitcoin halving happens approximately every 4 years and on 12th May, the reward for unlocking a new block on the Bitcoin blockchain will drop from 12.5 BTC to 6.25 BTC.
The halving is an essential mechanism in the Bitcoin ecosystem and is used as a tool to fight inflation and makes the coins more scarce. Bitcoin’s supply regulation and inflationary mechanics have considerable implications.
Implications of Bitcoin Halving
The Bitcoin halving will impact on miner profitability and on a wider scale, cause Bitcoin’s inflation to drop below 2%. This is expected to have a big impact on the Bitcoin market and there is a lot of speculation that it may trigger a bull run. Hence, we could expect to see an increased number of Bitcoin traders around.
The Bitcoin block halving and the reward halving will subsequently decrease, after which just 900 Bitcoins will be mined on a daily basis. After the halving, the Bitcoin block rewards received by miners for validating transactions will be reduced by 50%.
Hence, Bitcoin becomes more rare in accordance with the laws of demand and supply, whereby a continued demand for an asset results in an increase in its value and price. As we have seen with the previous two Bitcoin halvings, the upcoming halving could potentially mean a hike in Bitcoin’s price.
Will Bitcoin’s Price Rise?
The way in which the halving will impact the market, and the effect it will have on other cryptocurrencies remains to be seen. Many analysts are predicting that the number of active users of Bitcoin will soar, in the run up to, and following the event. This could also have an effect on other cryptocurrencies and crypto prices.
We await the outcome of how the halving will impact the market and effect prices and while the event is widely expected to spark another bull run, there’s always the chance it could go the other way and fail to meet short-term expectations.
Whatever happens, and as history has shown, it’s best not to be too concerned about prices and consider the bigger picture.
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