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Bitcoin experienced its third halving event around 9:30 p.m. on Monday, May 11, slashing block rewards for miners from 12.5BTC to 6.25 BTC.
The price of cryptocurrency has remained volatile throughout the event, falling by more than $ 900 the day before halving and trading around the $ 8,800 mark at time of writing.
The halving occurred when the 600,000th block was mined on the Bitcoin blockchain, and each subsequent block now earned miners half the reward for verifying transactions on the blockchain.
This change was incorporated into the blockchain at its inception as a method of controlling the supply of the cryptocurrency.
As Bitcoin’s adoption has increased, previous halving events have often led to large price swings, and the most recent halving is expected to be no different, according to several analysts.
Cryptocurrency analysts and experts have discussed the direction of this price change, citing everything from economic theory to the publicity display around the halving event as evidence of their positions.
During the year after the 2012 halving, the price of Bitcoin increased by 8,000%. 18 months after the 2016 halving, it had increased by 2,000%.
Blockchain expert Simon Dingle I previously told MyBroadband It doesn’t make price predictions, but if past trends repeat, then Bitcoin can see a huge price rise coming.
“If the previous halving events are something to go through, and they are, then we should see Bitcoin’s price rebound substantially towards the end of 2020,” he said.
Possibles scenarios
Before the half event, Luno brand ambassador Jason Deane said that there were a number of possible “bullish” and “bearish” scenarios for Bitcoin’s price after halving.
“The mining hash rate is likely to decline as this has happened in every half to date,” said Deane.
He added that blockchain security and its adoption rate should not be greatly affected, but the price was the subject of much speculation.
Deane said the bearish cases describe a possibility in which miners sell their Bitcoin to pay for updates to their equipment, which will be necessary as it becomes more difficult to mine Bitcoin profitably.
Furthermore, the widespread effects of the COVID-19 outbreak could mean that consumers are not thinking about Bitcoin, and therefore purchases will decrease.
On the other hand, Deane cited basic economic theory as an argument for a possible increase in the price of Bitcoin.
“If you lower your supply rate by 50%, you must lower your demand rate by 50% so that the price remains the same,” he said. “If demand stays the same, the price will be forced to go up.”
“Markets also work with sentiment. The expectation of a bullfight could be enough to create a bullfight, ”said Deane.
Bitcoin’s price currently remains volatile, and many analysts have predicted that cryptocurrency investors will only see the effects of halving towards the end of the year.
The following chart, courtesy of Currency Market Cap, shows how the price of Bitcoin has changed since the early 2020s.
Now read: Bitcoin falls below $ 10,000
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