The Bitcoin halving is undeniably a huge event for the entire crypto community and one that has had a huge impact, not just for Bitcoin. As the year draws to a close, we can really see the real aftermath of the May 11, 2020 halving. In this article, we take a look at the halving and how it affected Bitcoin over the course of 2020.
The role miners play in the blockchain network is a good introduction to Bitcoin in general and how it differs from other cryptocurrencies and fiat currencies. Otherwise, they have an indispensable position as they have to solve computational problems in order to validate a new block of transactions on the network. Their work not only ensures that the blockchain network is secure, but also without the miners it would be impossible for new BTC to come into circulation.
It goes without saying that it is a tedious job that requires investments in good equipment, computer hardware, energy, and time. The halving is an event that is expected to be mined after 210,000 are mined, and it occurs roughly every four years. The purpose of the halving is to cut inflation in half as the miners’ reward is also split in half each time it is halved. More specifically, before the first halving, the reward was 50 BTC in 2012, then it was reduced to 25 BTC and is 6.25 BTC in 2020.
The price of bitcoin
Typically, the price of Bitcoin depends on several factors, such as the position of competing cryptocurrencies, trading platforms that set their own average prices, and the relationship between supply and demand. The halving of Bitcoin as an event affects the supply of BTC as fewer miners are motivated to continue mining, which also further reduces the rate at which new BTC comes into circulation.
Otherwise, Satoshi Nakamoto’s offer is already limited to around 21 million BTC (18.5 million BTC are already being mined). Therefore, as the demand for BTC increases, so does the price of Bitcoin, as the number of BTC available is getting smaller and smaller. In fact, past halvings are linked to Bitcoin’s upward cycles.
The first halving in 2012 resulted in a price increase from $ 11 to $ 12. Then, in 2013, it marked Bitcoin’s first significant surge, hitting a price of $ 1,038 in November. Next, the price also rose from $ 576 in 2016 to $ 650 in 2016. As we know, 2017 is an important year in Bitocin’s history as it topped $ 19,000 in December 2017.
And that brings us to 2020. In 2020, after halving, the price rose from $ 8,784 to $ 9,999. Months after the halving, Bitcoin is still on a bull run, breaking the $ 17,000 mark in November. In addition, it is also the first year that December hits $ 20,000.
In addition, the effect was noticeable on the entire cryptocurrency market and other cryptocurrencies. For example, Litecoin crossed the $ 100 mark for the first time since 2019. It has also renewed the public’s interest in cryptocurrencies in general as more and more organizations and people want to learn and invest more about digital cryptocurrencies.
Still, no one can know for sure what will happen in 2021 or after the next halving in 2024. However, many people believe that the price of Bitcoin will continue to rise. Some projections see the possibility of reaching $ 96,000 in 2023 and exceeding $ 100,000 in 2025. But one thing is certain. Each halving intensifies the digital gold rush that is taking place right now.