What will happen when Bitcoin's block reward is halved for the third time?

The next Bitcoin block reward halving will take place sometime in May 2020, around block 57,000. Based on the predictions of the previous two halvings, many expect Bitcoin to see a significant price increase after the supply decreases, but there is no guarantee that this pattern will continue.
The two previous block reward halvings were accompanied by price increases. Will the same happen in 2020? The next Bitcoin block reward halving will take place sometime in May 2020, around 57,000 blocks. Based on the predictions of the first two halvings, many expect Bitcoin to see a significant price increase after the supply reduction, but there is no guarantee that this pattern will continue.
Reward halving, supply slowdownMaintaining deflation through an algorithm has always been part of the Bitcoin protocol design. It was built to ensure the value of Bitcoin. Cutting the block reward and setting the maximum possible supply of Bitcoin at 21 million Bitcoins gives Bitcoin an anti-inflationary property that runs counter to the tendency of central banks to print money at will. There are currently about 17.5 million Bitcoins in circulation, with less than 3.5 million available to be obtained through mining. When the next block reward halving occurs, Bitcoin's annual inflation rate will drop from the current 3.8% to around 1.8%. This will be the first time in BTC's history that it has fallen below the historical average of gold's supply growth of about 2% - 3%.
What will happen to the price? In 2012 and 2016, industry experts observed a significant increase in the price of Bitcoin about a year before the block reward halving event . The price rose parabolically after the halving. This prompted predictions that the same could happen with the 2020 halving in May, leading some speculators to start buying now. However, the numbers are not so clear-cut. After the 2012 halving, the price rose for two months, and in 2016 for a month: almost no immediate reaction to deflation. In other words, this can easily be explained by the "buy the rumor, sell the news" strategy implemented by some speculators.
Will May 2020 be different? There are a number of reasons to expect why the May 2020 halving could be different. First, Bitcoin observers have already seen two such events and now know what to expect. The effects of the upcoming reward change may already be reflected in the price. If this happens, miners may find themselves disadvantaged. They currently receive 12.5 Bitcoins for each block mined. When this drops to 6.25 BTC per block, miners will need to raise prices to make up for the loss of revenue. However, if the market boom caused by the expected halving is already reflected in Bitcoin's current price (for example, speculators drive the price of Bitcoin higher in anticipation of a bull run after the halving), we may actually see a collapse in the Bitcoin mining industry.
As revenues are cut in half, many miners may shut down unprofitable rigs. Generally, we expect assets to become more expensive when they become scarce. Therefore, the halving has the potential to double the price of Bitcoin overnight. The reason this has not happened in the past is due to pre-emptive buying before the halving occurs and the delayed market shock after the supply reduction. Another complication of the halving effect is that many miners typically convert Bitcoin into fiat currency after receiving it, which means that the supply of Bitcoin is not as scarce as the algorithm designed it to be.
This complexity is exacerbated by the fact that demand for Bitcoin is not as strong as its supporters would like, because it has not yet been implemented. Even if the supply decreases, the price is unlikely to reach a satisfactory equilibrium without consumer demand. Stopping Bitcoin mining would be catastrophic, as unlikely as it is. But it is not implausible, just as the price will rise like a parabola. Whatever happens, Bitcoin's third halving will attract attention. (Chain Finance)