Bitcoin bull

The next halvening is next year, and the effect on the price of bitcoin could be significant. For the few who are unaware, halvening is an event that takes place every four years. It’s when the reward that miners receive gets cut in half, reducing the rate of production of new tokens by half. It takes place a year from now in May 2020 and will reduce the reward for every mined block from 12.5 BTC to 6.25 BTC. But, will it have an effect on the price of bitcoin?

History suggests it will. There have been two previous halvenings, or halvings as some call them. The first was in November 2012, four years after Satoshi launched the currency. In the one year that followed the event, BTC’s price spiked by 10,000% from $10 to around $1,000.

The second halvening took place in July 2016, and this time, the price took off even before the event. The next year, the currency hit $20,000, its all-time high.

Granted, there’s no concrete evidence to link the two events to the price rise. However, one would be foolish to ignore the connection. After all, Satoshi created the halvenings for this exact purpose. In a letter to celebrated cryptography expert Ray Dillinger, Satoshi wrote:

The fact that new coins are produced means the money supply increases by a planned amount, but this does not necessarily result in inflation. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase.

Some Think So, Some Don’t

There are those who believe that the next halvening will be the catalyst for a major bull run. In a Twitter poll cited by Bloomberg, over 60% of the respondents stated they believe BTC will rally towards and after the event.

And it’s not just the Twiter community. Crypto bull Anthony Pompliano recently also expressed his belief that the halvening will bring good tidings. Pomp as he is known, who is also the co-founder of Morgan Creek Digital, tweeted:

Brian Kelly, the founder of BKCM capital, a crypto hedge fund also believes that the event will have significant implications on the BTC price. He told CNBC, “You generally have a rally a year into it, and a year out of it. And so we’re just at the beginning of that stage.”

But not everyone believes the event will be that significant, certainly not Kyle Samani. Samani, the co-founder of Multicoin Capital Management, a crypto VC firm, told Bloomberg:

“The first halvening brought inflation from 40% to 20%. The second from 20% to 10%. The next halvening is going to reduce it from about 3.8% to 1.9%. On an absolute basis, each halvening is becoming increasingly less relevant.

 


 

 

 


I am a very awesome human. I love writing, and I am awesome at it. I am a blockchain and cryptocurrency enthusiast and championing the blockchain through well-crafted articles is what I do

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