Bitcoin halving – A reason for people to HODL Bitcoin?

Bob Coiney

May 4, 2020

Bitcoin halving is scheduled on May 12th which means that it will be less than 10 days when this much expected will occur. Bitcoin halving event is when the number of generated bitcoin rewards per block will be exactly halved. This year the number of Bitcoin mined by miners per block will be halved from 12.5 to 6.25. The halving event is important and takes place roughly every 4 years that goes a long way in controlling the monetary policy. The event will also reduce the rate at which new coins will be minted thereby restricting the phase of inflation and supply.

The halving event that has seen its occurrence roughly once in 4 years or approximately once every 210,000 blocks will happen till the final coin is being minted. The halving event for Bitcoin that took place on November 28th, 2012 saw the reduction of block rewards from 50 BTC to 25 BTC. Later in July 2016, it was further reduced to 12.5 BTC. Now after this halving event, the annual inflation of Bitcoin will reduce from 3.65% to 1.8% which will approximately one-half of the global inflation rate as per the statement of Quantum Economics Founder Mati Greenspan.

The halving event will also make Bitcoin scarce in supply owing to its ceiling limit of 21 million coins. The current momentum of Bitcoin is encouraging but what it entails after the halving event will be difficult to say. The price history of bitcoin has been difficult to make for a thorough understanding of how prices will turn.

Analysts are also saying that the current bull run of Bitcoin can be attributed to the halving event as people are stocking extra BTC before the supply drops. Popular Crypto analyst Pedro Febrero is quite clearly highlighting that as per the Google trends the activity surrounding Bitcoin today is nothing compared to what it was in 2017. This could be the lack of new entrants but increased activity of the already existing Bitcoin investors. It is an attempt to capture as much as possible Bitcoins before the halving takes place.

With Bitcoin halving, we will also see the increase in the overall money supply as central governments will endeavor to print more currency to tackle the money crisis and fund the COVID-19 crisis. 

Image Source – howstuffworks