The Bitcoin halving is coming next year.
Bitcoin’s emission rate will be cut in half in 2020. This is known as a block reward halving. It is the third reward halving since Bitcoin was first introduced to the masses in 2009. Given the scarcity aspect of the world’s leading cryptocurrency, this reduced emission rate can have a significant impact on the price.
Historically speaking, block reward halvings are significant for Bitcoin. It helps reduce the amount of “new” BTC brought into circulation. At the current rate, 12.5 BTC is added to the supply every 10 minutes. Over the course of a day, that equals to 1,800 bitcoin, or $1,8 million at current prices. For a currency which is deemed to be scarce, there is still a lot of value being brought into circulation every day.
During the first halving in November 2012, one BTC was valued at $12.22. In the months following the emission reduction, bitcoin inches past $100 and $1,000 without much resistance. The Bitcoin price remained range-bound between those levels until the second halving came around in September of 2016. At that time, one bitcoin was valued at $657.61. Compared to November 2012, that equals to a 5,383% increase in value over the course of nearly four years.
Since the previous halving in 2016, a lot of things have happened. The Bitcoin price has surpassed the $10,000 level on numerous occasions. At its peak, one BTC was valued at over $19,000. As the emission rate will reduce again in mid-2020, enthusiasts expect big changes once again.
The current Bitcoin price is up by 1,535% since the previous block reward halving. That is a far cry from the 5,383% in 2016. Achieving such a high value again will be difficult. It would require the value per BTC to hit $35,410.
It is not impossible, albeit market circumstances make it seem rather unlikely. Throughout 2019, Bitcoin has struggled to break past $13,500. That said, a lot can change between now and the next reward halving.
When looking closer at the Bitcoin price chart, interesting trends become apparent. There is usually a lengthy accumulation period prior to the block reward halving. This period tends to last for roughly one full year.
Assuming this chart holds, the Bitcoin price will increase in the months ahead. It is believed the value can range anywhere from $11,000 to $25,000 by the time the halving occurs.
A lot has changed for cryptocurrencies since 2016. Regulatory efforts have come a long way since then. Bitcoin, furthermore, is now considered a legal form of payment in more countries than before.
New Zealand, Switzerland’s crypto region, and Japan are just some examples in this regard. There is also the growing focus on Bitcoin by the financial sector. While an ETF is still far away, the demand for cryptocurrency exposure cannot be ignored, especially as Bakkt’s Bitcoin futures were approved.
Plan B, has been tweeting about the next halving.
— PlanB (@100trillionUSD) October 5, 2018
— PlanB (@100trillionUSD) December 18, 2018
bitcoin halving: block 630,000
ETA date: 25 May 2020 01:11:18https://t.co/aYPWFo7TcL
— PlanB (@100trillionUSD) February 6, 2019
— PlanB (@100trillionUSD) May 25, 2019
— PlanB (@100trillionUSD) June 1, 2019