Bitcoin’s Halving: Stars are Aligning for Next Big Bull-Run

[Cordillerabit]

George McDonaugh is the CEO and Co-Founder of KR1 plc, the London listed cryptocurrency and blockchain investment company.


Could it ever be a good thing to have your salary cut in half? Ask a Bitcoin (BTC) miner and your answer might well be a resounding ‘yes’.

The spotlight is on Bitcoin once again as people, traders and investors look to see how the asset will be perceived and move in the coming months during this global health crisis. Every four years the amount of BTC that’s rewarded to miners is automatically halved. Satoshi Nakamoto baked this into the very heart of the protocol, starting at fifty bitcoins per block for the first 210,000 blocks. However, having passed through two halving events, the reward is down to BTC 12.5 per block and, on May 12, the Bitcoin reward will halve again to BTC 6.25 per block.

This means Bitcoin miners are literally about to have their income slashed by 50%.

On the face of it, this looks bad for Bitcoin. Less money flowing through the system potentially means less miners can stay afloat, and that means less computing power securing the system. But Satoshi was brilliant in understanding that, while less Bitcoin was going into the hands of the miners, BTC would also become more scarce. If there’s less bitcoin as an available asset on the market to satisfy the demand, the price of BTC will go up, potentially offsetting the reduction in rewards.

So far, it’s all gone to plan, as with each of the two previous halving events the price of Bitcoin has risen significantly after the initial shock to the market subsided.

At the first halving the price went from USD 11 to over USD 1,100 a coin a year later. Then in 2016, BTC went from USD 600 to over USD 20,000 by the end of 2017. Is it the only catalyst that pushes the price in this direction? Certainly not, but is it a major factor? The rules of supply and demand would suggest it is.

It is also important to consider the psychological factors at play here. Miners know the halving is coming, so they can squirrel away funds to help them survive through meagre times, only to re-emerge into the promised land of the USD 100,000 per bitcoin price level only one or two years later. Then there are the expectations of the wider market itself, could the halving be a self-fulfilling prophecy prompting everyone to pile in expecting the giddy heights of six digits? Narratives in the world of blockchain act like the Force in Star Wars, they mysteriously move and shape the market and in terms of the halving, the Force is strong with this one.

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[bigcash2011]

Everyone is calling 100k for btc as next peak value but i think it can be more or less, the post describes really well how the miner psychology will play out but it is quite simple to understand as less btc supply will be available daily from miners who sell daily so simply applying the science of demand and supply we will know that price is definitely going to boom after halving.