What will happen with Bitcoin’s 2020 halving?

Time travels to May 23, 2020. While lovers are still savoring the sweetness and romance of 520, Bitcoin will usher in its own carnival and turmoil - Bitcoin halving.

A large number of investors entered the market, pushing up the price of the currency

Before May 23, a large number of investors have already rushed to the market for the money that Bitcoin halving will bring. All those who buy Bitcoin are buying its expectations. When investors have sensed the wealth that Bitcoin will bring, they will step into the investment ranks in advance, waiting for the huge rise in Bitcoin to bring them huge profits.

Judging from the two halvings in history of Bitcoin, the benefits brought by halving are obvious to all. The first halving event in the history of Bitcoin occurred on November 28, 2012. At the time of the halving, the price of Bitcoin was around US$12. On the 369th day after the halving, that is, on December 2, 2013, Bitcoin reached a historical high of around US$994, an increase of nearly 8,000%.

The second Bitcoin halving occurred on July 9, 2016. The price at the time of the halving was around $650. On the 526th day after the halving, which was December 16, 2017, it reached an all-time high of around $19,500, an increase of nearly 3,000%.

Although in 2019, no one could accurately predict the market situation of Bitcoin during the halving in May 2020, but compared with the huge turmoil brought to the cryptocurrency circle by the Bitcoin halving in previous years, all investors will predict that the probability that Bitcoin halving will bring significant benefits is very high.

Therefore, as early as the beginning of 2019, some extremely far-sighted investors saw the lowest price of Bitcoin brought by the bear market in 2018 and chose the best time to buy the bottom. There is no doubt that their choice brought them a high rate of return. In 2019, Bitcoin has maintained a stable slow bull market except for the normal price correction.

As the Bitcoin halving is approaching in 2020, a large number of investors have spotted this unanimous money-making opportunity and entered the Bitcoin market. The price of Bitcoin has been extremely high for a while, and the price has been rapidly hyped up, reaching its highest point since 2018.

On May 23, 2020, Bitcoin was successfully halved. The block height of this halving was 630,000, and the block reward was directly reduced from 12.5 BTC to 6.25 BTC, which means that 900 BTC are newly issued every day instead of 1,800 BTC, reducing the output by tens of millions of dollars every day. The amount of reduction is very considerable.

Rewards are halved, and a large number of miners leave the market, threatening the security of Bitcoin network

While the turbulent Bitcoin halving is causing a storm in the cryptocurrency world, it is more worry than joy for Bitcoin miners.

The halving will double the mining cost, which will cause changes in the supply and demand relationship. The supply and demand relationship is the most basic law of economics: prices are determined by supply and demand. If the demand remains unchanged and the supply decreases, the price will rise. Due to the significant increase in the price of the currency in the early stage, new miners were attracted to mine, which significantly increased the computing power. The block reward was halved, which was simply worse for the miners. Many mining machines broke even or had negative profits in a short period of time, which led to a large number of miners shutting down, seriously threatening the security of the Bitcoin network.

In the Bitcoin network, because it is distributed, its security is guaranteed by the number of miners, or more accurately, by the decentralized computing power. If the computing power of the entire network is too low, it will easily cause security problems (double-spending attacks). Bitcoin miners are profit-seeking, which is why Satoshi Nakamoto incorporated human profit-seeking and game theory into the design of the Bitcoin network, ensuring the most fundamental reason for the Bitcoin network to operate intact for 10 years.

Fortunately, it was a false alarm. Due to the sudden decrease in miners and the strong support of most investors, the price of Bitcoin rose sharply while the computing power decreased. A group of miners filled the gap in time, allowing the price, computing power, and mining costs to reach a balance before the Bitcoin network was threatened, making it profitable for miners. The miners who persisted to the end still made great profits in a short period of time because of the small competitive pressure and decreased computing power, and Bitcoin entered a state of orderly output.

Cryptocurrency carnival, the big bull returns

Before and after each round of halving, Bitcoin will usher in a bull market, which is the driving force of Bitcoin itself and also the life cycle of Bitcoin itself. The bull market has eliminated some people, but also left a group of people who can persist and have faith. Competition becomes less, and the price of the currency soars, so the remaining people can get more benefits. In this bull market after the halving, those who stay will eventually get considerable benefits and returns.

Within a week after the halving, the price of the currency increased sharply, and then Bitcoin experienced a slight correction within a month. It then took the market nearly half a year to slowly feel the impact of the halving of inflation. Bitcoin began a parabolic movement and ushered in a sharp rise in the price of the currency in 2021. The currency circle officially ushered in a bull market and there was a carnival.

Back to today in 2019, we are full of expectations for Bitcoin in 2020. Although history will not repeat itself, it has its own rhythm. The above is my best expectation for the Bitcoin halving, and I only hope for better.