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September 27, 2020
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Bitcoin

Bitcoin investors prepare for today’s halving

Even today, a major event will take place in the crypto universe, the halving of Bitcoin, which has the potential to affect the entire crypto market.

Halving takes place every four years and halves the number of new Bitcoins issued every 10 minutes by the Bitcoin blockchain.

In the current cycle, this means that the number of new Bitcoins issued every 10 minutes will drop from 12.5 to 6.25.

This event is very significant, as it reduces the amount of Bitcoin generated by transactional ‘block’ on the Bitcoin blockchain, which means that the supply of new Bitcoins is less and it is more difficult for cryptocurrency miners to generate the same amount as before.

Bitcoin is also not the only cryptocurrency that goes through these types of events. Litecoin had its own halving.

Effect on Bitcoin price

As halving decreases the amount of new Bitcoin as a supply, and the supply of demand remains constant, it usually results in price increases, in previous events this has resulted in great Bitcoin performances.

For example, since the last halving in July 2016, Bitcoin’s price has increased by about 1,180% at the current level of around $ 8,838, although with some very dramatic fluctuations in the interim period.

In a report last week, Bitcoin storage and transaction analysts said that this next halving could show a potential price increase of around 270% until the next halving in 2024, bringing the price up to $ 33,000.

However, others, like Raoul Paul, a former hedge fund manager at Goldman Sachs, claimed that digital currency could go even further, potentially rising to $ 1 million over the next four years.

Meanwhile, Danny Scott, chief executive of the CoinCorner cryptocurrency exchange, predicted that in three to nine months Bitcoin will surpass its historic $ 19,511 high, hit during a 2017 frenzy.

Investors should be cautious in the short term

Although the imminence of hlaving leaves Bitcoin investors gearing up for a spike, Leonard Neo, head of research at the Bitcoin Stack index fund provider, said he expects a “short-term pullback” in Bitcoin prices immediately after halving.

However, in the long run, Neo is optimistic, saying that they expect Bitcoin to “register significant price appreciation in late 2020 and early 2021”.

Another reason for long-term positivity is the growing interest of the institutional investor in Bitcoin and other cryptocurrencies.

Edward Moya, of OANDA, said last Friday that this trend will provide “great support going forward” as institutions start spending money again when concerns about the coronavirus pandemic subside.

“After the dust settles, Bitcoin could appear with a strong upward trend, as long as the financial markets do not see a second wave of [coronavírus] spread across Europe and America triggering a flight to safety ”, he added.

Source: proactiveinvestors

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