Bitcoin halving is a technical event that is very anticipated in the community of users and investors in cryptocurrencies. The last halving occurred on 11, May 2020 and it had a far-reaching impact, not just on the Bitcoin community. Here we explore the main consequences that are still present in the crypto market due to the Bitcoin halving.
What is Bitcoin Halving?
The Bitcoin halving is an event that happens every four years when 210,000 BTC are mined. The event is devised to cut the inflation rate in half by halving the block rewards miners get. First, the block reward stood at 50 BTC, and then after the first halving in 2021, it was 25 BTC, then it got even smaller in 2016 with 12.5 BTC per block, and finally, on Monday, 11 2020, it was halved to 6. 25 BTC.
This is a clever decision of Satoshi Nakamoto ( the inventor of BTC and blockchain technology) because he already put a limit to the number of BTC that can be discovered to 21 million.
Furthermore, he also programmed the difficulty of the level mining to increase as the collective computing power in the network increases. Hence the supply of BTC grows at a slower rate than the demand. This factor, coupled with the finite supply of BTC, makes the cryptocurrency a very scarce and valuable asset.
Moreover, based on the ratio of supply and demand, as the demand increases at a faster rate than the available supply, the price keeps increasing. This means that after each halving, the price of Bitcoin surged. And Bitcoin was on a bull run after a halving. So, all in all, based on previous data, it was expected the price to increase after the halving in May.
The Halving in 2020
It did drove the growth of the price of Bitcoin over $9,000. But, it had a subsequent impact in the following months in 2020. The price continued to rise during the summer and reached a price of $10,944 in July. The price continued to grow in the months that followed, and its first new record was in November when it exceeded $18,000. By the end of the year, it surged and reached an all-time high price of $20,000. And what’s more, in 2021, Bitcoin rallies above $40,000 for the first time ever.
The Impact on Investors
Naturally, this was the reason for a lot of retail and institutional investors to take an interest in BTC and invest in BTC and other cryptocurrencies. Compared to previous Bitcoin halvings, today, the technology is much more advanced, and it is very easy to register on a platform, easily available on a mobile device. Bitcoin digital is a site that uses the latest AI technology. More specifically, they apply AI technologies in algorithmic trading and Bitcoin Digital .
What distinguishes this bull cycle from previous ones is not only the new high price of Bitcoin, it is also the interest of high-profile institutional investors and businesses. Actually, a lot of businesses that operate offline and online are accepting payments in BTC. This puts Bitcoin and other cryptocurrencies at an advantage because it will be easier for new users to purchase various goods and services using their BTC, for example.
The Bull Cycle of Other Cryptocurrencies
The bull run of Bitcoin has also influenced the price of other cryptocurrencies. Some notable examples include Litecoin, as it has a price that climbed over $100, while Ether’s price went above $1,476. Otherwise, the entire crypto market is booming, and a lot of corporations are looking to create their own cryptocurrencies.
For example, Facebook is looking to launch Libra in 2021, along with their own blockchain-based payment system. Other companies that are also developing cryptocurrencies include Arias Intel Corp, BitBlox Technologies Inc, and others. China has also developed the digital cryptocurrency Yuan.
Price Predictions
Thanks to Bitcoin’s bull cycle, there are many positive expectations regarding the future price of Bitcoin. Some experts feel that it will climb to $100,000 by the end of 2021. Other experts feel that the price of $300,000 is a possible outcome in 2021. When it comes to Bitcoin’s market capitalization, experts think it will reach $3 trillion in 2025. That being said, no one can say with certainty what events will impact the ratio of supply and demand of Bitcoin. Bitcoin and other cryptocurrencies are volatile assets, and beginners should do their own research and pick reachable financial goals. However, we can’t deny that the halving has put Bitcoin on the map, and it started an unforgettable bull cycle that still lasts today.