On may 11, 2020, the third halving of bitcoin took place on the block with the serial number 630,000. The reward for miners was decreased by half once again – from 12.5 to 6.25 BTC. That is, if bitcoin network hashrate will remain the same, coins will be mined two times slower, and emission rate will be reduced, which may be an impressive incentive for growth, but only if the demand for bitcoin will rise or at least remain at the same level.
Halving is one of the key events in 2020 not only for bitcoin, but also for the entire crypto industry, which will show what value digital assets carry for the community. The crypto world has to be tested for strength prior to further development. Events that will take place immediately after halving can set the direction of the crypto market development for many months or even years. This is why the result of halving and events that are happening in the market now are so important. In this article, we will look at possible events that await bitcoin after the reward for miners is halved.
Will bitcoin grow in price after halving
Perhaps this is the main question that worries users interested in cryptocurrencies. Bitcoin serves as the leader of the crypto market, and when its rate decreases, altcoins also follow it, and altcoins fall much faster than digital gold due to lower liquidity. We do not predict the exchange rate and do not know, like anyone else, in which direction the price will move, and we only talk about the likely consequences, based on various factors that each investor can evaluate independently, and then draw the appropriate conclusions for themselves.
So, in this section, we will look at the factors that speak in favor of the growth of bitcoin. Based on historical data, we can assume that bitcoin will grow in the long term, and there are several reasons for this:
- Despite the past hype around cryptocurrencies and a long correction, interest in bitcoin continues to grow not only from ordinary people, but also from institutional investors. The number of futures contracts for bitcoin in the near-halving days on many platforms increased by more than 43%. Some sites have recorded record volumes of contracts;
- Bitcoin is becoming a more limited asset. With each halving, the issue rate is reduced by about half, which makes the supply more limited and contributes to the natural inflation of the crypto asset price. After the last halving, bitcoin began to be mined more slowly than physical gold, which may favorably affect the investment attractiveness of bitcoin.
Often Internet users also cite the example of previous periods when bitcoin first grew in price before halving, and then after a small correction continued to grow even faster. But this does not guarantee that this will happen again this time.
Will the price of bitcoin fall after halving?
Although many crypto enthusiasts are filled with positive expectations regarding the event, analysts and financial experts of the crypto market urge not to rush and not to build up inflated expectations about the growth of the cryptocurrency. In their opinion, the price is rising because investors expect such growth when halving occurs. And in fact, such a price reaction is already inherent in the development of bitcoin. If you look at the chart, you can see that after each halving, the growth is slower and slower. This is also due to an increase in capitalization: more serious amounts of investment are required for significant growth than before.
The actions of miners also play an important role. Large mining pools have the main computing power, and before halving, they produced more than $1.5 billion in BTC. It is easy to assume that bitcoin pools and crypto exchanges have accumulated a critical mass that can bring down the entire crypto market in an instant. Therefore, it is important whether the miners will remain in order to maintain the functionality of the bitcoin network, or switch to other, more cost-effective to mine cryptocurrencies. Speed and security of the blockchain network depend on the hashrate. If large miners leave bitcoin, the network will be full of transactions that hang for a long time. In this case, bitcoin can be damaged quite seriously. In addition, there will be a serious threat to security: if many large pools leave, then one of them or a group can use their computing power to take over the bitcoin network, organizing a “51 attack”, which will allow them to essentially take over the entire network and, accordingly, all the bitcoins. Keep in mind that the block reward determines the profit miners get.
After every halving, the profitability of mining decreased, and the hashrate somewhat dropped, as some miners stopped mining. You can see their reaction on the figure below. The same thing happened in 2016.
The pattern is repeated in 2020. But note that then the network’s hashrate continued to grow and set new records. But why didn’t the hashrate dropped so much after the last halving, if mining became almost unprofitable? Perhaps companies are finding areas with cheaper electricity and conditions that improve the performance of mining equipment. And they also expect the exchange rate to rise in the future.
So what should I do? Is it better to buy or sell bitcoin now? Keep in mind that the current situation is very different from what it was in 2013 and 2016. Now there are other external factors that can have a positive impact on the development of the crypto industry, such as the crisis caused by the COVID-19 pandemic. Traditional assets and currencies show a strong dependence on the impact of disasters, political and economic actions both globally and within a particular country. Traditional markets have become no less volatile than the crypto market in the current situation.
Perhaps now is not the best time to buy cryptocurrency. Although it is likely that in the long term, bitcoin will grow, most likely you will still be able to buy it at a lower cost for quite some time. If you are not sure that bitcoin will grow in the near future or think that it may fall, then you need to take care of selling bitcoin profitably.
There are services that allow you to sell bitcoin at a higher price than on many exchanges. One of such services is the HiRiBi crypto exchange platform. You can sell bitcoin and earn more on the exchange than on most other platforms. For example, at the time of writing, the sale rate on the exchange site was $9750 with an average cost of $8865 on exchanges. That is, if you sell one bitcoin, you could get additional revenue of about $880 – this is about 10%.
Advantages of the service:
- PayPal support;
- Favorable sale rate;
- Attractive referral program;
- Fast payments: you only need 2 network confirmations to automatically send money to your PayPal account.
You can profitably exchange bitcoin to PayPal using HiRiBi service and get a higher profit from investing in bitcoin.
Summary
Whether bitcoin will grow or fall in price depends on one of the main economic indicators: the balance of supply and demand. The price depends on how much people are willing to buy and sell an asset for. When there is a low demand for an asset, as for any product, the price decreases – this is the basis of the market. Conversely, with increasing demand, the price also increases. Thus, much is based on investors expectations. If bitcoin does not meet their expectations, then we can expect a new deep stage of correction. But at present there are no serious reasons to believe that will really happen.
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