Education • 3 min read
By Sophie Nicolas
What does the Bitcoin Halving mean for crypto investors? And what can we learn from past halvings? Read all about it in this article.
The Bitcoin Halving is an event that halves the rate at which new bitcoins are created and cuts the block reward that miners receive in half. This means that miners receive 50% fewer BTC rewards than before the halving.
Past Bitcoin Halving events have positively impacted the market price - at least when you zoom out a bit and look at the big picture. If we take a look at the 2012 halving, the price of 1 BTC rose by 8069% in the year following the halving. Additionally, one year after the 2016 Bitcoin Halving, we saw a 284% increase in the price of BTC. Consequently, the community is anticipating a price increase as a result of subsequent scarcity and past scenarios. However, we can only speculate on the actual trend ahead and there is no way to know for sure.
If you are an investor, then the Bitcoin Halving should be cause for you to celebrate! However, as most investors know, the Bitcoin ecosystem today is not the same as it was four years ago, or four years before that. For example, back then, involvement in financial markets was much more limited and not as widely developed as today. Therefore, there are also speculations that the Bitcoin Halving of 2020 will not deliver the same powerful effect it did in the previous years. But no one knows for sure and one of Bitcoin’s unique characteristics it’s the high amount of unpredictable events that caused previous price movements up or down.
In order to get a chance to grasp how the halving will affect the price of Bitcoin, we also need to look at the role of miners. After this Bitcoin Halving, the block reward miners are going to receive will be halved once again, to 6.25 BTC. This could mean that some miners are going to stop mining because they are no longer able to afford the upkeep of the electricity and hardware used. This, on the other hand, means that the overall hashrate of Bitcoin could decrease, as miners shut down their farms or move to other proof-of-work cryptocurrencies with similar algorithms to Bitcoin. As mining Bitcoin gets easier however, there will be others who see their chance to enter the game - that’s the beauty of it.
In conclusion, we can only look back at the two previous Bitcoin Halvings and take an educated guess at what could potentially happen after the third one. The past two Halvings happened during or in the middle of bull markets, where investors got more and more confident in the mid- to long-term fundamentals of Bitcoin. While we can now, at the end of April 2020, also see an increasing confidence in Bitcoin and more mainstream adoption, we are still in a phase of price discovery for this new asset class, which is just one decade old.
RISK WARNING: The information contained in this article is for general purposes of information only and is not in any form an investment advice. Please note that cryptocurrency trading may involve a significant level of risk and is not suitable for inexperienced traders. For further information regarding the risk in connection with cryptocurrency please also refer to our terms and conditions (see 12. Risks).
Why your money is safe with BitpandaRead more
Bitpanda Tech • 2 min read
Bitpanda GmbH ve grup şirketleri (Bitpanda) Türk Parasının Kıymetini’nin Korunması Hakkında 32 sayılı Karar’ın 2/b maddesine göre Türkiye’de yerleşik sayılan hiçbir kişiye yönelik olarak 6362 sayılı Sermaye Piyasası Kanunu başta olmak üzere Türkiye Cumhuriyeti Devleti mevzuatı hükümleri gereği Türkiye’de faaliyet izni gerektiren hiçbir sermaye piyasası faaliyetine dair hizmet sunmamaktadır. Şayet Bitpanda’nın yabancı sermaye piyasalarında vermiş olduğu hizmetlerden Türkiye’de yerleşik kişilerin faydalandığı tespit edilecek olursa tüm zararları kullanıcıya ait olmak üzere bu hizmetler ivedilikle sona erdirilecektir.
As the name would suggest, some cookies on our website are essential. They are necessary to remember your settings when using Bitpanda, (such as privacy or language settings), to protect the platform from attacks, or simply to stay logged in after you originally log in. You have the option to refuse, block or delete them, but this will significantly affect your experience using the website and not all our services will be available to you.
We use such cookies and similar technologies to collect information as users browse our website to help us better understand how it is used and then improve our services accordingly. It also helps us measure the overall performance of our website. We receive the date that this generates on an aggregated and anonymous basis. Blocking these cookies and tools does not affect the way our services work, but it does make it much harder for us to improve your experience.
These cookies are used to provide you with adverts relevant to Bitpanda. The tools for this are usually provided by third parties. With the help of these cookies and such third parties, we can ensure for example, that you don’t see the same ad more than once and that the advertisements are tailored to your interests. We can also use these technologies to measure the success of our marketing campaigns. Blocking these cookies and similar technologies does not generally affect the way our services work. Please note, however, that while you’ll still see advertisements about Bitpanda on websites, the adverts will no longer be personalised for you.