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On April 8, Bitcoin Cash (BCH) had its first halving event that saw its price gaining 11.2% rising from $249.23 to $277.22 but later dropped to around $265.
Just like all other proof-of-work blockchains, Bitcoin Cash (BCH) is designed to manage its monetary supply by gradually printing mining rewards. These rewards are printed to machines that secure the BCH network by solving complex mathematical problems. Bitcoin Cash went through with its first halving event on April 8, with the token gaining 11.2% on the day. Bitcoin SV, which will also have its halving event scheduled for April 10, exceeded these gains. It recorded a 19.4% surge within the same day. Only this pair of Bitcoin forks were green in the overly red market on April 8.
But, these gains were short-lived since the vaulted halving event did not generate a lot of fireworks as expected. After rising from $249.23 to $277.22, the coin’s price crumbled and fell back to around $262 in less than an hour. Nonetheless, it has consolidated its gains, and it is currently trading at around $265.
Some analysts are convinced that miners will switch from BCH and BSV in April until Bitcoin’s halving takes place in mid-May, trying to compensate lost revenues.
Hash Rate Plummets
After Bitcoin Cash reduced its block rewards by half, it hit some miners’ gross revenues severely. The mining difficulty and hash rate on Bitcoin Cash were already on a downward spiral in the run-up to the halving event. Hash rate is a measure of how much miner power is participating on the network. It was down following a rapid drop in the token’s price.
The Bitcoin Cash hash rate chart shows that it has plunged by almost twice. Interestingly, after the April 8 halving event, Bitcoin Cash mined just one block in 2 hours. This means that miners have started abandoning the token in huge numbers. They aim to mitigate their losses, awaiting the forthcoming BTC halving event. Despite all that has happened, BCH is still trading around $265.
Arcane Research said that to avoid slow block discoveries due to a lower hash rate, a difficulty adjustment algorithm was added to the BCH fork. Some days a single block was generated in an hours while during other days a block was generated per minute. Thus, the firms said that this strategy:
“Allowed miners to inflate the BCH supply much faster than what was intended in bitcoin; by accelerating the generation of new blocks. This acceleration is the reason behind the early halving of BCH and BSV.”
Bitcoin Cash Halving a Non-event?
Traders and crypto enthusiasts have, for so long, maintained that block reward halvings would result in the price increase of their given coins. The halving process of a coin’s block reward decreases the inflationary rate of its supply.
Theoretically, it increases the coin’s prospects of becoming useful as ‘sound money.’ Hence, it attracts more investors who develop a fear of missing out (FOMO) on an increasingly rare but valuable asset. In contrast, others argue that such block rewards were already taken into consideration by the investors and entities who purchased the coins long ago.
According to previous reports; one of Bitcoin Cash most prominent proponents dismissed the suggestion that the halving would have any serious influence on the price. Roger Ver stated:
“The last two times, basically nothing happened at all. It was a non-event; it wasn’t exciting at all, and that’s my prediction for what’s going to happen this time as well.”
Bitcoin’s block reward halving event is expected to take place in the next 34 days. It appears like the market will not go on any rampage until that event takes place.