The bitcoin halving happened earlier this week, squeezing the supply by half. Since then, the price of this digital currency has gone up, albeit not too drastically. Still, judging by the experiences from the past, bitcoin havening is expected to have a positive impact on the BTC price.
The logic behind this is that the reward bitcoin miners receive has been cut by half. Before the bitcoin halving, the reward was 12.5 bitcoins. Since May 11, the reward is 6.25.
A Brief History of Bitcoin Halving
By definition, a bitcoin halving (or halvening) is an event that cuts the reward for mining new blocks by half. In layman’s terms, this means that bitcoin miners receive 50% fewer bitcoins for verifying transactions than what was the case prior to the havening.
There is no way to prevent or postpone bitcoin halvings. These events are meant to occur every time the number of blocks reaches 210,000. Generally speaking, that’s something that happens every four years.
The event that took place this week was the third halving in the history of bitcoin.
|Date||Event||Reward in BTC|
|January 3, 2009||The Birth of Bitcoin||50 BTC|
|November 28, 2012||First Bitcoin Halving||25 BTC|
|July 9, 2016||Second Bitcoin Halving||12.5 BTC|
|May 11, 2020||Third Bitcoin Halving||6.25 BTC|
When is the Next Bitcoin Halving?
Bitcoin halving happens once every 210k blocks until the maximum number of coins is mined. That number is 21 million BTC, which means that the final bitcoin halving should happen around the year 2140.
When it comes to the future that’s not so distant, we should see two more bitcoin halving events this decade. The next is expected to happen in 2024 when the reward for bitcoin mining is going to drop to 3.125 BTC.
Effect of Halving on Bitcoin Price
Bitcoin miners are not the only ones affected by these events. Cryptocurrency traders are also among those who pay a lot of attention to bitcoin halving. The reason is the price of BTC has gone up rapidly following the two previous halving events.
When the first halving in the history of bitcoin happened in 2012, its price went from $11 to almost $1,150. Four years later, the rise of the BTC price was not as fast. However, in the next couple of years, bitcoin went to almost $20,000.
To understand the effect bitcoin halving has on the price of the cryptocurrency, it’s best if you imagined bitcoin was gold. What if the amount of mined gold dropped down by half every four years?
Its price would skyrocket each time a halving happens. The same should happen with the price of bitcoin, which has now become less profitable to mine.
Bitcoin Price a Few Days Post-Halving
It’s been a few days since the 2020 bitcoin halving happened, but no drastic changes in the price of the world’s most popular cryptocurrency have been recorded. This year has been pretty volatile for bitcoin, with a significant price drop at the start of the COVID-19 pandemic in the US.
On March 12, bitcoin hit its lowest price in a while, getting to under $5,000 at one point. Its price has stabilized since and, despite frequent fluctuations, it’s somewhere in the ballpark of $10,000 with all the signs saying it’s going to go up in the upcoming weeks.