Cryptocurrency Market Update: Can Halving create new Bitcoin millionaires?
Bitcoin is less than three weeks to its third halving since it was incepted in 2009. Halving is a rule integrated in Bitcoin code that ensures that mining rewards are slashed by half every four years. This ensures that the network controls inflation while at the same time, preparing Bitcoin to hit the 21 million coin maximum supply.
As this years’ halving approaches, investors and cryptocurrency enthusiasts are seating on the edge with bated breaths in anticipation of possible pre and post-halving rallies. According to Michael Dubrovsky, co-founder at PoWx, a crypto mining firm, in theory “there will be less Bitcoin available to buy if miners have less to sell.”
Consequently, the reduction in mining reward will see to it the number of Bitcoins coming into the market is decreased (lower supply). At the same time, if demand remains the same then price per Bitcoin is likely to go higher. Moreover, if the market encounters an increase in demand due to institutional investors and other parties such as millennials likely capitalize on the rising price of Bitcoin, therefore, a massive price movement would be expected in the months following the halving.
Can history repeat itself?
Data from the past halving events in the Bitcoin network says that the price tends to rally after halving. The first halving in 2012 saw Bitcoin hit an all-time high around $1,000 from $11. The most significant rally took place after the second halving in 2016 when Bitcoin rallied to highs around $20,000 from $700.
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