Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The Bitcoin price is rising steadily again and has crossed $9k. BTC halving is getting closer and closer with less than 10,000 blocks away.
Bitcoin seems just about ready for its upcoming halving as it’s starting to climb back up again. Just as the month was starting, Bitcoin tried to hit the $9,000 mark. Its inability to do so at the time was touted as a big problem especially since the halving is drawing closer. Now, Bitcoin has begun rising steadily and has successfully scaled the $9,000 the market has been waiting for. The good news puts the market at ease that the Bitcoin price will react positively to the halving, as it’s currently trading above the $9k mark.
The Bitcoin halving is currently less than 10,000 blocks away. According to a live halving countdown with varied information, the event will take place after the next 9,666 blocks are mined. With just a little over 67 days on the countdown, the halving should take place on the 11th of May, 2020.
The halving event makes sure that just the right amount of scarcity is imposed on the Bitcoin network to avoid inflation. It also slowly reduces the amount of Bitcoins produced per block, because Bitcoin has a finite supply with a total maximum of 21 million coins. Every 210,000 blocks, – which takes about 4 years – the halving rewards miners receive is cut in half. This time, block rewards will drop from 12.5 BTC to 6.25 BTC.
How Halving Affects Price
The price of Bitcoin always spikes in response to the halving. The scarcity that the halving ensures means that the price of Bitcoin will spike in response.
The upcoming one is the third halving. The first one was in November 2012. Bitcoin’s mining reward at the time, dropped from 50 BTC to 25 BTC. Just before the halving, Bitcoin was trading around $11 and eventually jumped above $1,135 over the next 12 months.
The second halving in 2016 saw block rewards drop to 12.5 BTC with prices eventually hitting $20,000 although not as quickly as the first.
Based on this trajectory, most of the Bitcoin market expects prices to jump significantly post-halving.
Will the Same Thing Happen?
There is a debate about whether or not this halving will have the same effect on Bitcoin. Firstly, the first halving’s spike was over 10,000% in about a year. By the second time, the spike was way less at 2,827%, and even that took at least a year and a half. Because of this, some people expect that the price jump will be a lot less in percentage.
There is also the current coronavirus outbreak to grapple with. Bitcoin has not been as resilient as the community expects. To fight the outbreak, the U.S. Federal Reserve cut interest rates as it tried to save the economy. Ordinarily, this is supposed to cement the market uncertainty and activate Bitcoin’s safe-haven status. But the fact that the Fed’s decision did next to nothing for Bitcoin has been pointed out by economist and critic Peter Schiff.
In a recent tweet, Schiff bashed Bitcoin because it failed to rally on news of the rate cut. According to him, holders should sell their Bitcoin because “if [it] won’t go up, why own it?”
Most people believe that the halving will shoot Bitcoin past its current all-time high and on to bigger numbers. We have just 67 days to find out.