Bitcoin halving explained: What is cryptocurrency event and will it boost price?

bitcoin halving

Realisation of gains only comes to an end once MVRV retraces back to levels around or below 1, where the average unit of supply was last moved at the current market price. Then, as MVRV swings sharply downward, on-chain volume spikes, as large volumes of coins change hands at lofty prices, and realised value starts outgrowing market value.

The primary intended use of Bitcoin is to serve as a direct, peer-to-peer exchange of value without the need for trusted intermediaries. What seems to be more common instead, is speculative trading in Bitcoin via intermediaries described as ‘cryptocurrency’ exchanges. As such, the value of this cryptocurrency will continue to increase. And the surging Bitcoin’s price motivates minors to keep digging.

What is bitcoin ‘halving’ and will it boost price?

When trading with Bitcoin, it is very important for users to get familiar with all terms and processes that are included. Bitcoin halving takes place once 210,000 blocks have been added . This is a key attribute that explains why Bitcoin is described as a deflationary asset, especially as inflation fears continue to escalate. Initially, the reward for adding a new block to the network was 50 BTC. The PoW mining protocol operates on the principle that the first person to solve a problem gets rewarded. However, this is no mean feat as these problems are always highly complex and often require specialised mining rigs to solve. Miners must guess a lot of numbers before they can find the one that meets their requirements.

This is quite impressive compared to the 9.1% annualized inflation rate of the June consumer price index. A person who has a Bitcoin wallet wishes to transfer Bitcoin to another address using his Bitcoin address. To do this, he must create a transaction, sign it with his private and public keys and broadcast the transaction to the Bitcoin network. The goal is to add the transaction to one of the next Blocks, which is then added to the Bitcoin blockchain. Peters believes this combination of diminished supply and increased demand could see the price of Bitcoin comfortably exceed its all-time-high of December 2017 and reach between $20,000 and $50,000.

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I wrote about Lido Finance fairly extensively in my report addendum, where I discussed the likelihood that I had dramatically underestimated the amount of Ether that would be staked. Now, however, we have also seen the rise of decentralized solution RocketPool to go along with centralized exchange staking solutions in Kraken and Coinbase. Sign up for exclusive newsletters, comment on stories, enter competitions and attend events. ES Money asked leading figures in the crypto arena for their thoughts on bitcoin’s prospects. Bitcoin prices can be affected by people’s attitudes towards it. Google trends data also appears to show that fewer people are searching for Bitcoin today than they were a few years ago, with searches peaking in December 2017. However, searches doubled between April and June, before falling back to levels last seen in February.

  • Money is either saved or invested in asset classes like interest-earning deposits or bonds, equities, commodities and other assets.
  • This event happens every 4 years and it’s important because it helps to control inflation.
  • As a block of BTC takes 10 minutes to mine, bitcoin halving happens every 2,100,000 minutes – or 4 years.
  • Halving events in Bitcoin reduces the block reward for miners by 50%, meaning the rate at which new bitcoin enters circulation decreases.
  • To help you understand halving, let’s explain how the coin is acquired.

Another drawback of is that it could lead to inflation. With less Bitcoin being released into the market, the value of each coin will increase.

Bigger concerns about Bitcoin

Historically, Bitcoin prices boom one year after each previous halving. We will have to wait and see what will happen and how the crypto market will respond after the halving. To sum it up, halving has been correlated with an increase in the long-term price of Bitcoin.

Why is Bitcoin going down?

Experts also point to a potential recession, rising interest rates, the continuous war in Ukraine, and inflation hitting a fresh 40-year high for why we're seeing slumping prices in the stock and crypto markets.

In theory you would expect the price of the asset to rise, economics 101. The first halving in 2012 was when this theory would be put to the test. The event is not determined or governed by a centralised body. Instead, it is hard-coded into bitcoin’s underlying blockchain that was created in 2008 by its pseudonymous creator Satoshi Nakamoto.

How to buy bitcoin interactive brokers – bitcoin value analysis

Furthermore, there is no precise date for when the reward for mining a block will be cut in half. It depends on when the 210,000th block since the last event is mined. The halving took place on May 11, slashing the block reward from 12.5 to 6.25 at the number 630,000 block – bitcoin was trading around $8,787/BTC at the time. This was the second halving and the date was highly anticipated in the crypto community.

However, there are reasons to believe that the halving will have a real and lasting impact on bitcoin prices. The first is that the increase in difficulty will force miners to work harder to earn more bitcoins. This will increase the cost of mining, which should be passed on to consumers. Simply put, a what is bitcoin halving is the process of halving the rewards of mining Bitcoin after each set of 210,000 blocks is mined. By reducing the rewards of mining Bitcoin as more blocks are mined, a Bitcoin halving limits the supply of new coins, so prices could rise if demand remains strong. Bitcoin halvings will cease when bitcoin reaches its maximum supply of 21 million BTC. At this point, miners will no longer receive block rewards in the form of newly minted bitcoin.

Author: Kevin Helms