Why the next Bitcoin halvening could be the most dramatic one yet

[JessicaVL]

Bitcoin, the world’s largest cryptocurrency by market cap, is gearing up for a halving in May 2020. Like any blockchain, Bitcoin must undergo updates. A halving is a form of system update that occurs after 210,000 blocks have been mined. This has happened twice since 2009, most recently in 2016. With one due next year, we’re taking a look at why the next Bitcoin halving could be the most dramatic one yet.

What is a Bitcoin halving?
A Bitcoin halving occurs approximately once every 4 years, after 210,000 blocks have been mined by the system. According to eToro “a Bitcoin halving means that the rewards that Bitcoin miners receive for validating transactions are reduced by 50%. So, after the last halving event in 2016, the blockchain went from mining 3600 BTC per day to mining 1800 BTC. The Bitcoin halving date scheduled for May 2020, only 900 BTC will be mined a day.” This means that the reward for mining is reduced by half. Currently at 12.5 BTC per block, the reward will fall to 6.25 BTC. So, let’s take a look at why the next Bitcoin halving could be the most dramatic one yet.

https://www.youtube.com/watch?v=Idd3Zy98lsM&feature=emb_logo

Heralding a bull run
Historically, Bitcoin bull runs have been linked with halvings. Looking back at November 2013, approximately a year after the first halving in 2012, Bitcoin reached $1,000, an all-time high at that point. In December 2017, Bitcoin’s price peaked at $20,089 (according to CoinMarketCap), which was preceded by a halving event in 2016.

With many analysts predicting that Bitcoin could reach a market cap of $1 trillion in the near future, and trading platforms like eToro increasing accessibility into the market, it’s very likely that the next halving event could herald a historic bull run for the coin.

https://twitter.com/cburniske/status/1119607130070372353/photo/1?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1119607130070372353&ref_url=https%3A%2F%2Fcryptoslate.com%2Fprominent-investor-thinks-bitcoin-will-hit-1-trillion-capitalization-in-next-bull-market%2F

Active users
With 634,708 daily active users as of 15 November, it’s likely that Bitcoin’s active addresses will skyrocket leading up to, and following, the Bitcoin halving in 2020. This will lead to more transactions on the blockchain, and could drive demand - further boosting Bitcoin’s price. However, active addresses really only tell half the story. The amount of funds that pass through the blockchain, known as network volume, is also a vital indicator of network activity. It shows not just how many accounts are conducting transactions, but also how much is being transferred. While the two are inherently linked, taking a look at network activity on the run up to the halving can also be a key measure in realizing just how much of an impact an event like this can have on the network.

Institutional Interest
According to a report by Grayscale, institutional investment in Bitcoin grew dramatically over the course of 2019. Grayscale reported that, “Inflows tripled quarter-over-quarter, from $84.8 to $254.9 million, despite recent declines in digital asset market prices.” The report continues, saying that “a majority of investment (84%) came from institutional investors, dominated by hedge funds.”

Why the increase in institutional interest? They’re coming to the realization that Bitcoin can be a good way to hedge against economic and political risk.

According to Michael Sonnenshein from Grayscale, “Most of our institutional investors are actually not crypto hedge funds. It really runs the gamut — we have tons of global macros funds who maybe look at digital assets as a way to short fiat money or thinking about all the economic and political turmoil going on globally.”

Is it a coincidence that institutional interest is also increasing around the time of the BTC halving? Not likely. The halving is used as a tool to combat inflation within the Bitcoin ecosystem, and Bitcoin was created in response to the global recession of 2008.  With a recession imminent, it’s likely that institutional investors see Bitcoin as a way to hedge against a global financial crisis.

https://www.youtube.com/watch?v=kv9N4VidBPg

What’s next?
How Bitcoin responds to the halving event in 2020 remains to be seen, but historical evidence shows that it’s likely that we’ll see a bull run in the near future. With many analysts already arguing that Bitcoin could reach $1 trillion very soon, it’s possible that all of the factors mentioned in this article will contribute to the rise of the cryptocurrency. Now that we’ve taken a look at why the next Bitcoin halving could be the most dramatic one yet, it’s pretty clear that we’re in for a wild ride over the next couple of years.

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https://www.etoro.com/blog/market-insights/why-the-next-bitcoin-halvening-could-be-the-most-dramatic-one-yet/

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[nelson4lov]

The 2020 Bitcoin Halving Event is one of the the important milestone event in Bitcoin's history. 6 months after the last 'Halvening' Bitcoin began the epic run in 2017. Contrary to popular beliefs, The next halving will take a similar route.  If block rewards are halved, prices have to go up to compensate for it. It might very well be the case. Let's see how it goes though. A bull run isn't certain just yet. I'm keeping my eyes and ears open to get a feel of what the market (traders, users etc) think about the halving event.

[tsaroz]

This would be a much waited event and still the most uncertain one.
The halving of litecoin showed that a bearish market won't stop the price from rising. But again Bitcoin is a hot topic for investment and with all those leverage trading, whales and exchanges may act in an unpredictable way to make the price much more volatile.

[amishmanish]

After this halving, the coinbase reward will drop to 6.25 BTC. The price then has a direct affect on miner profitability. Historically this has been taken care of by the bull run. This time around Bitcoin is no longer new. It has become pretty mainstream. I think the affect on price now can only be driven by institutional investors.

This in turn is driven by whether institutional services for bitcoin can be a source of profit or not. The major institutions involved now are exchanges, trading apps, DAO like MAKR etc. If they are making a profit on their activities, they'd like to hoard more BTC to provide services to a wider consumer base. This is something we will come to know just before the halving.

This can be pretty much a moment of truth because BTC will be going into this halving with full mainstreaming. Its no longer a novelty that will make people invest before they can understand it. For the common population of developed countries, who are running the risk of losing savings to Govt debts, i think BTC is a must-have hedge. BTC is going to be integrated into its own peer-to-peer economy and it will continue to hold value as its economics is not limited by national borders and trade agreements.

[hatshepsut93]

Now that we’ve taken a look at why the next Bitcoin halving could be the most dramatic one yet, it’s pretty clear that we’re in for a wild ride over the next couple of years.

In my opinion, the first halving ever was the most dramatic, since it was the first time when the halving code was executed in the live environment. After that, we know that the next halvings will be safe, so there's less uncertainty about the code.

With many analysts already arguing that Bitcoin could reach $1 trillion very soon

What are they smoking?

[kryptqnick]

Heralding a bull run
Historically, Bitcoin bull runs have been linked with halvings. Looking back at November 2013, approximately a year after the first halving in 2012, Bitcoin reached $1,000, an all-time high at that point. In December 2017, Bitcoin’s price peaked at $20,089 (according to CoinMarketCap), which was preceded by a halving event in 2016.

With many analysts predicting that Bitcoin could reach a market cap of $1 trillion in the near future, and trading platforms like eToro increasing accessibility into the market, it’s very likely that the next halving event could herald a historic bull run for the coin.

I don't think it's right to say this in our context. If there were, like, 30 halving events before, and the vast majority were followed by the bull runs, it could be said that historically the two are correlated. But there've been only two halving events, and they were not immediately associated with price growth. In fact, the price actually went down and was finding its way up for a while, and the bull run of the end of 2017 can hardly be attributed to an event that happened almost a year and a half before that.
So this halving can bring joy, especially if the FOMO works, but it can also have any other or no impact.

[Leonardo7]

The bitcoin halving which is expected to take effect by year 2020 has been making analysts predict the possible upsurge of the bitcoin price due to fewer miners' rewards, creating a further scarcity in the market. I won't over-rely on expert predictions of what becomes of the price by the year 2020, I just keep an open mind.

[sovie]

I don't think coin halving will have any impact on BTC price and their won't be any surge in price. See ethereum hard fork is coming in start of Dec 2019 and we haven't seen anything yet in eth price. These are news of early days and today investor is very cautious about speculations. As many have lost money on rumors.

[Kyraishi]

Bitcoin in its current state has been stronger and has had more support than ever, and there are a lot of people who are anxious to hear about what's going to happen after the bitcoin halving, and anything to happen.

We've never had such a huge event before, and even though prices going up seems like a given, there could very much be a chance that prices just bottom out, and it actually doesn't go anywhere, we will need to wait and see.

[Ryker1]

Well, this is now the most awaited event on Bitcoin, waiting for the next halving to come. Every four years come there is the next halving event and reward the miners each time the had successfully mined block. And probably this is also the time that Bitcoin will upsurge as we already experienced last 4 years passed and many bitcoin prediction experts say, it’s not just a belief that history repeats itself. Probably it will happen on the said event and many new investors will come that might lead Bitcoin to bring massive adoption. Indeed, all of these are such speculation, let's wait what will happen on that day.

[odolvlobo]

...
Heralding a bull run
Historically, Bitcoin bull runs have been linked with halvings.
...

Despite the popularity of the myth, here is no correlation between halvings and bull runs.

Here is a simple way to show that: Take a log price chart, and without looking at the dates see if you can figure out from the chart when the halvings occurred. Next, assuming that there are certain features in the chart that indicate the times of the halving, note that those features also point to non-halvings. There is no correlation.

[aardvark15]

I have also linked the halving to a bull market run in another topic. I think there could be a connection because scarcity increases at this point.

[GreatArkansas]

Look at this chart for the upcoming block halving and previous block halvings of Bitcoin.
Do we think, it will happen again? As we can see based on the chart we are around in reaccumulation stage, hmmmm. Seems fit, a lot of people waiting for another bull run, but on the chart, it is marked around 1st quarter of the year 2020 which is also around the month of upcoming block halving.

[aardvark15]

Look at this chart for the upcoming block halving and previous block halvings of Bitcoin.
Do we think, it will happen again? As we can see based on the chart we are around in reaccumulation stage, hmmmm. Seems fit, a lot of people waiting for another bull run, but on the chart, it is marked around 1st quarter of the year 2020 which is also around the month of upcoming block halving.

Great chart! I have not seen this version before. I like the way it breaks down the 4 parts to each Bitcoin market cycle.

[pooya87]

Bitcoin, the world’s largest cryptocurrency by market cap, is gearing up for a halving in May 2020. Like any blockchain, Bitcoin must undergo updates. A halving is a form of system update

a "system update" is suggesting changes that weren't planned like a new version release for that system, adding new features that weren't there before,.... but halving is predefined and not new so you can't call it a system update.

Historically, Bitcoin bull runs have been linked with halvings.

we only had 2 halvings but a dozen bull runs, there is no way you can link them together as there aren't enough of halvings to do so. people do that because they fail to check the history or are too lazy to do so.

Looking back at November 2013, approximately a year after the first halving in 2012, Bitcoin reached $1,000,

and you proved my point right away
after first halving in 2012 price went from $10 to $260 which is a 2500% rise then 8 months later we had ANOTHER bull run where price went to $1200 that is the ATH you are talking about.
but because you never checked the charts you don't know this. you just repeat whatever else people have been saying online! without thinking about it first.

[jseverson]

With many analysts already arguing that Bitcoin could reach $1 trillion very soon

What are they smoking?

Lol they probably meant market cap. BTC needs to hit ~$50k for that to happen, and while that's still a massive number, it doesn't sound as unrealistic.

While there is no direct correlation as others have pointed out, I do believe that the halving will drive the prices up -- the halving itself might not have an effect, but the hype surrounding it might. That being said, the halving not living up to the hype could easily have the opposite effect of a price slide, and it's even possible (though improbable, this is where high fees are actually advantageous) for the hashrate to slide a la Litecoin's.

[NavI_027]

I don't think coin halving will have any impact on BTC price and their won't be any surge in price. See ethereum hard fork is coming in start of Dec 2019 and we haven't seen anything yet in eth price. These are news of early days and today investor is very cautious about speculations. As many have lost money on rumors.

Bitcoin halving is not just a simple rumor, it is the most awaited event by all of bitcoin holders and really got a positive outcomes (if we based on the previous halving). For this reason, I oppose on what you're believing in. I have a strong gut feeling that btc will pump few weeks after the bitcoin halving because it was very impossible that it will not cause a pump even the smallest one.

Well, honestly both of us are not totally right at this very moment because it's not yet happening. For now let's wait and see what will happen. Actually, I'm already excited so much because I already have ample amount of btc savings .

[Ucy]

Something people need to watch out for:
the halving could kill decentralized mining if price goes up "a bit" or "remains thesame". I am surprised miners aren't worried or taking this possibility into account. Wonder if few are getting subsidy or something. Strange!

[Kakmakr]

Look closely at your graph, you will see that the ATH is almost 1 year after the Halving took place. We can say that the Halving is a trigger for a new Bullrun, but the impact of the Halving is only seen 1 year after the event took place. 

So based on your graph, we should in theory only see a new ATH in 2021.    I doubt if a lot of people are going to be happy waiting for that long to show a profit on their Bitcoin investment. < I have friends who bought at the 2017 all time high of $18 000 and they are very unhappy with the performance of their Bitcoin investment> 

[Artemis3]

Something people need to watch out for:
the halving could kill decentralized mining if price goes up "a bit" or "remains thesame". I am surprised miners aren't worried or taking this possibility into account. Wonder if few are getting subsidy or something. Strange!

That is not something to watch out, it is something to expect. No matter what happens, it won't be exactly twice the price in the long run, mining will be less and less profitable, until only those with free electricity (or willing to just lose) remain.

You can't have large mining operations from renewable energy, unless you build a large dam for yourself, therefore mining will shrink. The market self regulates this, in combination with Bitcoin's code that makes sure a new block is found every 10 minutes and the reward for this halves every 4 years. Simple, and effective.

And yes, as time passes the (ever reducing) reward will not justify any large investment, so stop surveying rivers and valleys to build dams, you are too late if you were to order construction by the time its finished you won't be able to ever recover.