In 2020, the next Bitcoin halving will take place. Increasingly over the coming months, this will become discussed on internet forums, social media, and at conferences. The current bullish cycle we see, even if shortlived, is most likely a sign of what’s to come throughout the rest of 2019 and 2020 due to the halving event.
There are currently 17,700,000 bitcoins in circulation. That means just shy of 85% of the bitcoins to ever be produced have already been mined. There are just over 3 million bitcoins left to mine. There are at present 1,800 bitcoins minted per day.
The next Bitcoin halving takes place on May 24, 2020. The block reward for miners on the network will decrease from 12.5 to 6.25 bitcoins. This represents the third “halving” event ever in the history of bitcoin. Due to Bitcoin’s overall controlled supply of just 21 million, that the supply halves every four years ensures scarcity for bitcoin.
“Large drawdowns are not unique to digital assets and occur across all asset classes and markets, typically following periods of excessive risk-taking,” wrote Grayscale about halving. “These ‘re-pricings’ can create compelling investment opportunities and in many cases offer above-average risk-adjusted returns in the years that follow. For investors with a multi-year investment horizon and a high-risk tolerance, the confluence of discounted prices, improving network fundamentals, strong relative investment activity and the upcoming halving may offer an attractive entry point into Bitcoin. This is especially relevant for investors building core strategic positions in Bitcoin over time.”
The daily price change in May has averaged 4.7%, compared with 3.5% in April and 1.1% in March, reports Bloomberg. December, the last time prices had swung so much, averaged 4.2%.
While bitcoin fell on Tuesday 2.4%, it had not fallen in the four days prior. Bitcoin is currently at $8,860. The last time the price of bitcoin reached $9,000 was a year ago.
“The recent surges in Bitcoin are mainly based on the supply side,” wrote eToro’s Mati Greenspan in a note this week. “There’s already a shortage of Bitcoin in the world and with the halving event coming up next May, the countdown to even less supply has already begun.”
The Crypto Index pushed its upper band during Tuesday’s trading sessions and then fell. Bitcoin makes up 30% of that index.