According to the built-in nature, a halving takes place once every four years cutting the bitcoin block reward in half. Since the origination of bitcoin, it passed 11-year history and has come through two halving events with an upsurge in price and this halving is going to be the third one which is first-approaching. It is expected that Bitcoin along with cryptocurrency market will be highly impacted because of the halving.
The halving is scheduled to be held next month. The mathematical code underpinning the cryptocurrency refers that only 21 million bitcoins can ever be generated and no amount of quantitative easing can artificially inflate this. But because of mining process, up to 18 million bitcoins have already generated.
Necessity of Halving
Some crypto enthusiasts entitles halving event to be quantitative hardening just opposite to quantitative easing. Whenever 210,000 blocks are mined, halving cuts the production of bitcoin in half taking place once in every four years. The May-destined halving is to see mining rewards decline from 12.5 bitcoins per block to 6.25 bitcoins.
This halving will take place as per it is hard-coded into bitcoin’s underlying blockchain. This halving event keeps bitcoin away from extreme price inflation. Bitcoin was designed as a solution to the perceived flaws of established financial system.
What will be the price of Bitcoin after the halving?
If we go through the record of previous two halving events then we can noticeably see that previous two halving were done leaving upsurge in price and higher volatility in entire cryptocurrency market. The price upsurge was due to the basic economic principle of supply and demand. It is really cumbersome to attribute particular gains and losses to a specific event. The value of Bitcoin was increased by 80 times in 2012 halving and 300 percent in 2016 halving.
The approaching halving is going to be done amid an economic recession but it’s unknown whether the downfall of market is driving money away from traditional assets into cryptocurrency. Bitcoin is yet to prove itself during global economic disruption even though some analysts claim bitcoin to be a safe-haven asset akin to gold. Bitcoin attracted many with its 2017 bull run. That’s why crypto lovers are waiting for another such big moment to see. Amid this critical situation of economy we can expect the price of bitcoin to continue in the right direction.