Opinion: Google searches for "Bitcoin halving" have increased significantly this year. Maybe nothing will happen after the halving?

Source: LongHash

Editor’s note: The original title was “Google searches for ‘Bitcoin halving’ have increased significantly this year”

According to multiple estimates of mining factors, Bitcoin will undergo a new round of block reward halving in about 35 days. As a result, the original 12.5 BTC reward for mining each Bitcoin block will be reduced to 6.25 BTC, and its inflation rate will be halved thereafter. Some investors believe that this halving will push Bitcoin prices higher, as a reduction in supply tends to stimulate price increases.

Now, more and more people are interested in this halving (also the third reward halving of Bitcoin). According to data from Google Trends, searches for "Bitcoin halving" and "halving" have increased significantly in recent months.

The chart below shows that over the past 12 months, global search interest in "Bitcoin halving" has risen from 19 in April last year to 78 at the beginning of this month, having peaked at 100 around mid-March.

Google's trend report scores the search volume from 0 to 100 based on the highest point in a given time and region, analyzing people's interest in searching for a certain keyword. For example, looking at the data for the past year in the United States, the search volume for "Bitcoin halving" reached 100 points in mid-March, the highest record in the past year. In early April 2020, the search volume for this keyword was 78 points, a 22% drop from the highest record day.

This growth trend has been evident since December last year, when the search volume was 22 points, and then rebounded to 85 in mid-February.

This surge in keyword searches correlated with Bitcoin’s rebound from a low of $6,400 in December to $10,500 in mid-February, suggesting that the halving hype was likely a catalyst. Of course, that correlation broke down later, as markets panicked due to the global coronavirus pandemic and Bitcoin prices crashed to $3,800 in March.

However, the data is getting better.

Preliminary Google Trends data shows that searches for the keyword in the week of April 5-11 are expected to hit a 12-month high by the end of this week. Detailed data from the United States is more interesting, with Google predicting that Americans' searches for "Bitcoin halving" this week will be twice as much as last week.

Chart: Google Trends

Since this week is not over yet, it is important to note that the above chart is only a forecast, as shown by the dotted line on the right end of the chart.

The increase in this keyword search volume seems to be related to the recent frequent news reports on the upcoming halving.

To give two examples, well-known cryptocurrency investors such as Galaxy Digital's Mike Novogratz and Morgan Creek Digital's Mark Yusko have mentioned the term "halving" in recent interviews with media such as CNBC and Bloomberg, which may also be a factor in stimulating everyone's attention to this event.

Let me tell you another interesting thing. How powerful is the publicity for this Bitcoin halving? My grandfather, who is nearly 90 years old, called me and asked me about the halving. I am not kidding. He asked me what the halving principle is and what impact the halving will have on the price of Bitcoin. Later, I asked him how he knew about this. He said he saw it on the news, especially some articles on CNBC.

The reason why Bitcoin halving has caused heated discussions is also related to the so-called "halving market" - that is, the impact of halving on Bitcoin prices.

The impact of halving on Bitcoin price

The most common argument is that Bitcoin halving will drive up prices: PlanB, an anonymous quantitative analyst in the field of digital cryptocurrency, shared a chart in March 2019, pointing out that the scarcity of Bitcoin is related to its value (regarding scarcity, he used the most intuitive ratio of existing supply to annual inflation rate to show it, which is the so-called S2F model, that is, the stock-to-flow ratio).

In fact, PlanB found that the scarcer Bitcoin is, the more exponentially its value grows, according to his logarithmic regression analysis. For example, the model predicts that after the halving, the fair value of the Bitcoin network will rise to $1 trillion to $2 trillion, which is a price of $55,000 to $110,000 per BTC.

Although many people have begun to believe in Plan B's model, some people think that the statement that "prices will soar if production decreases" is not very reliable.

Alex Krüger, a well-known cryptocurrency analyst and economist, explained in October 2019:

“There are huge holes in the notion that if miners get less block rewards, the price of Bitcoin will go up in the long run.”

He attributed his idea to a simple fact: miners also need to eat. In other words, miners also need to sell coins to pay for electricity to maintain operations.

However, some people think that this is just a gimmick and nothing will happen in the end.

Seattle-based hedge fund Strix Leviathan explained in a recent report that there is currently no definitive evidence that the halving event will definitely drive up Bitcoin prices.

He said:

“Bitcoin’s supply schedule is a major selling point for cryptocurrency evangelists… Market participants have been anticipating the halving since 2009, when there was only one player in the space. However, previous research by Strix Leviathan has shown that the impact of the halving event is not that clear when looking at broader market sentiment.”

Regardless of the final outcome, after the halving, Bitcoin’s inflation rate will be lower than the U.S. dollar’s ​​target inflation rate of 2%.

LongHash, understand blockchain with data.