Bitcoin halving event in the crypto world is like the Olympic Games, it happens once every 4 years when the block rewards of BTC for miners are cut in half. It has happened in 2012, 2016, and now 2020 the number of new bitcoins issued every 10 minutes will drop from 12,5 to 6,25. Bitcoin’s inflation rate will reduce from 3.82 percent to 1.8 percent. This event will occur approximately on 11th of May according to www.buybitcoinworldwide.com website.
There’s a limit to the number of Bitcoin that will exist: 21 million. Once Bitcoin hits that amount, miners will no longer receive block rewards, and no new Bitcoins will enter the market. In fact, the amount of available Bitcoin will decrease over the years. When someone forgets their private key, for instance, all the BTC that person owned are now lost and the system will never recover them. Over time, Bitcoins will continue to disappear from the system, meaning that the remaining BTC will rise in value as they become increasingly rare. What will happen after the halving? Nobody knows as there have ever been only two of these events. The only place we can look for answers is in the past.
The first halving occurred on November 28th, 2012 when one BTC was worth around $11. A year later in 2013, the price of one bitcoin spiked to $1,100. That’s a 100x growth in one single year. Bitcoins’ price eventually fell to around $220 and it remained below $1,000 for the next few years. The second halving took place in July 2016. Bitcoin maintained a price of around $600–$700 before flying to $20,000 in the bull run of 2017. Bitcoin had grown over 33x from its price before the second halving and over 1,818x from its price before the first halving.
It is believed that the block reward halving makes mining unprofitable and can make many people quit. Judging by the previous periods, it can be noticed that sooner or later after the halving, the following price increase will balance the market out, permitting miners to continue a profit-making, despite the halved reward.
In 2020 we are also seeing massive volume surges all around the world. For example, Chile has just hit a new all-time high on volume for bitcoin traded, as Chileans are fleeing the Chilean Peso as the currency is suffering from inflation due to pandemic. Chile is not alone. Columbia, Mexico, Peru, Brazil, Venezuela all see huge surges in bitcoin purchases as their local currencies are facing increasing pressure and uncertainty. But nowhere is this more apparent than Argentina because the country is now in a massive 65 billion foreign debt. The volume has increased 1028% in Argentine pesos, 407% in BTC, and 139% in USD since the beginning of 2018, thus showing substantial growth.
When the number of new coins is reduced by half and the demand remains unchanged it is logical that the Bitcoin exchange rate should begin to rise. The next halving will happen in the year 2024 and later in 2028. Looking at the past price waves, it has shown a significant increase in value after the halvings, maybe it would be the right time to buy and hold on to your coins for the future?