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Since Bitcoin is still the undisputed king of the digital currency market, experts are always waiting for its next move. One of the most important events in the digital currency market is the process of halving the price of Bitcoin or Halving.

The upcoming Halving will take place in May and will have a big impact on the price of bitcoin. Although the price of this currency usually fluctuates, Halving shakes the digital currency industry so much that only powerful miners will survive.

Today, the attitude of people towards bitcoin is very different from 10 years ago. The presence of some counterfeit digital currencies in the market has made people indifferent to bitcoin. However, most of them later accepted Bitcoin as a trusted digital currency, especially when its market value reached $ 20,000 so that its impact on people is still felt today.

The price of Bitcoin reached $ 3,000 in 2018, which was like a nightmare for those active in this field. But price volatility gradually improved to $ 10,000 in the market. One of the issues affecting the price of bitcoin is Halving, which we will examine today.

What is Halving?

Halving happens every 4 years, at the end of which bitcoin experiences a relative decline in production. Although this may seem like a sad thing, bitcoin storage is limited; In other words, when the last bitcoin is made and its total reaches 21 million units, no more coins will be produced in its network.

About 85% of the world’s total bitcoin reserves (about 18 million coins) are currently traded worldwide. Although this figure is very significant, there is still a long way to go until the end of bitcoin reserves. This amount will increase day by day, in addition to the inevitable phenomenon of it also affecting bitcoin. It occurs after the completion of every 210,000 blocks in the Bitcoin network. It will make the production of new coins much more difficult.

In other words, the Halving protocol will halve the block reward after reaching a certain set of conditions. This greatly affects the miners because, after each Halving, the value of their received bitcoins decreases by 50%.

Why is Halving happening?

You may be wondering why the miners’ bonus should be reduced to 50% periodically and a large number of miners should be eliminated. The answer lies in the value of bitcoin and its anti-inflation system.

If all the bitcoins are generated quickly and the number of bitcoins is unlimited, the value of the bitcoins will be much lower and will go down over time. Therefore, with the help of Halving, it is possible not only to maintain the value of Bitcoin over time but also to increase its value.

Halving’s impact on bitcoin prices

It experimentally raises the price of bitcoin, but in general, the supply/demand ratio formula plays a decisive role in the price of bitcoin. In other words, according to this formula, people face a decrease in assets after each successful bitcoin move, so the demand for purchase increases, and the price of bitcoin goes up accordingly.

All activities related to digital currencies have increased in the last 4 years, for example, many media outlets have talked about bitcoins and some sectors have used bitcoins in their important sectors. After looking at previous patterns, it can be said that as Halving approaches, people think they will make a good profit, so they turn to buy bitcoins.

In fact, given the recent Halving, if something happens to the price of bitcoin this time around, we will see that traders will rush to buy bitcoin to take advantage of the price increase. In other words, these measures will increase demand. It will eventually lead to higher bitcoin prices.

Halving History

It has such irreparable effects on the miners that he practically removes some of them from the scene. But the remaining miners will find a way to sell Bitcoin profitably. It will have a positive effect on the initial price of the coin. In the following, we will examine the Halving of the last few years and their effects on the price of bitcoin:

Halving No. 1

The first Halving occurred in November 2012. The price of Bitcoin at that time was about $ 11, but after a year it reached $ 1,000 Bitcoin had never experienced such a price fluctuation until that day. Although its price dropped to $ 220 a few years later, it was still more valuable than it was before Halving.

Halving No. 2

Halving No. 2 took place in July 2016. The price of Bitcoin fluctuated between $ 600 and $ 700 at that time, but in 2017 it suddenly reached $ 20,000! This terrible price increase caused the price of bitcoin to increase about 33 times before the second one and 1818 times before the first one.

Halving No. 3

No. 3 is for taking effect on Bitcoin in the coming months. It will have a major impact on bitcoin prices. Most users are hoping that this will be as expensive as ever. In other words, according to this theory, and considering the previous patterns, the price of Bitcoin will increase 10 times to 100 thousand dollars. Some digital currency experts, such as CEO Kraken, believe that the price of bitcoin will exceed $ 100,000 after Halving 2020 and will reach $ 1 million.

Countdown to the big day

The exact time of the new bitcoin Halving is predicted between the 14th to the 18th day of May or the 25th to the 29th of May. Keep in mind that some issues may change the exact time of Halving’s occurrence. For example, a new block is normally created every minute in the bitcoin blockchain, but increasing or decreasing the speed of block building can affect its timing.

The last bitcoin Halving event is expected to take place in 2140. This will be the case if all 21 million available bitcoins have been mined and after that. The miners will not receive any block rewards. During the bitcoin life cycle, 32 Halving events occur and after that, the network reaches the quorum and no more bitcoins will come out.

The Halving event is very important because, without it, coins cannot be on time. In addition, the economic model of digital currencies relies heavily on Halving. In other words, like the inflation control process, it keeps the supply of coins constant. It also distinguishes between Fiat currencies (with unlimited supply) and cryptocurrencies.

The new bitcoin Halving is very important because it breaks the record of circulating coins. In other words, after Halving in 2020, about 90% of the total bitcoin supply will be in circulation.

Conclusion

This year, it will have a short-term and long-term impact on bitcoin mining. The event will shake up mining so much that it will screen small operators. So that large miners with access to a cheaper energy source have more space. Undoubtedly, with its advent, bitcoin mining loses its appeal and suffers heavy losses. The event will also affect the bitcoin hash rate and stop its previous uptrend.