What impact will Bitcoin halving have on investors?

In finance circles, there’s an event on the near horizon that is being discussed with all the anticipation with which sports fans might greet the Olympic Games or political commentators would prepare for a Presidential election. Yes, the four years since 2016 have flown by and the time has come around again for another Bitcoin halving.

Bitcoin halving - effect on investors 102030A dramatic history

Every four years, the block reward for mining Bitcoin is halved. So in 2012, it went from 50 to 25, in 2016 from 25 to 12.5 and this May it will go down to 6.25. It is the price surge that followed those previous halvings that has really got people’s attention.

Back in 2012, one Bitcoin was worth $12 on halving day in November 2012. By the end of 2013, its value had shot up to more than $1,000. 2016 also saw an upsurge, although not quite such a dramatic one. This time, the price rose from $650 to $2,500.

2020 – a different story?

So the months after halving were the periods when, even for an asset with such legendary volatility as Bitcoin, prices went nothing short of haywire. In the brave new world of 2020, there will be far more interest in Bitcoin halving than there was on these previous occasions. The arrival of mobile trading apps and platforms like Bitcoinsrevolution that provide direct access to trading bots have brought crypto trading to the masses.

But this also means that the crypto market is far more mature. The whole idea of halving is to reduce the rate of Bitcoin mining, thereby increasing scarcity of coins on the market and pushing up their value. The point to keep in mind today, though, is that the crypto community has been talking about little else over the past few months. Miners, traders and investors know exactly what is going to happen and, give or take a few days, exactly when.

Most have already prepared themselves for May, and as a result, some commentators suspect that this year’s halving will be something of a damp squib. Jason Williams, one of the co-founders at Morgan Creek Digital Assets, Tweeted that he believes it is going to be “a non-event.”

In a recent interview, he explained his rationale, saying: “Large miners that are holding BTC will have to sell to cover operational expenses or use cash as revenue halves. New buyers have to come in to move this market up. So the halving is being dealt with now by those who are operationally affected by it.”

Plenty of unknowns remain

Nevertheless, it would be naïve to suppose we can make any definitive predictions as to how the market will react. The huge number of amateur traders who have entered the market will inevitably include some who know little about the halving, and are basing their decisions on rumor and gut feeling, a fact confirmed in research carried out by Grayscale. Ultimately, all we can do is watch and wait – just like those political observers and sports fans we mentioned earlier.

Video – Cryptocurrencies


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