Bitcoin halving is something that every Bitcoiner looks forward to once every four years. It is an event of fundamental importance and it has a major impact on the whole cryptocurrency space.
Many also believe that it influences the Bitcoin price in the long run since its primary function is to make BTC more scarce and deflationary – that is a definite advantage over the US dollar and other numerous fiat currencies.
Brief history of Bitcoin mining
Halving was born by the mastermind of Bitcoin’s pseudonymous creator Satoshi Nakamoto. In accordance with it, every four years at a certain block miners see their rewards get cut by half. This is exactly what adds to Bitcoin scarcity since it greatly reduces the amount of BTC injected into the market – the circulating supply.
This procedure also prolongs the mining of Bitcoin for many years ahead. In fact, with all the upcoming halvings, the very last one of 21 million BTC is scheduled to be mined in the year 2140.
Besides, miners’ block rewards consist not only of the BTC they generate but also are made up of transaction fees. As soon as the last Bitcoin is produced, miners will continue their operations by verifying transactions and thus will continue to get their share.
The very first mining happened in the fall of 2012. The next one arrived four years later – in 2016. The third halving smashed the cryptocurrency space in the year when the Covid pandemic unleashed – in 2020. Back in that year, in March, Bitcoin briefly went below $4,000 and oil traded under zero. The fourth halving is to land later this month, in approximately two weeks from now (the estimated date is April 20th).
When BTC was only launched and Satoshi Nakamoto left the public eye, miners produced 50 Bitcoins with each new block on the chain. The second halving cut that down to 25 BTC. After the same thing repeated four years later, miners were able to produce 12.5 BTC.
Now, before the fourth halving hits, they are minting 6.25 BTC per every new block they generate. After the thing is over, the amount of minted Bitcoins will reduce to 3.125 for the next four years. Many miners are forced to switch off their gear and quit the business with each new halving behind since the profits they make cannot cover their mining costs and give enough income any more.
Besides, due to the tremendous increase in the Bitcoin difficulty that miners have to deal with mining now remains profitable only for large companies and pools, not to individual miners as it was in Bitcoin’s early days.
Experts’ opinions on course Bitcoin price takes once halving is here
Many traders wonder which the best strategy is – buying, selling or just hodling – as the halving’s steps can be heard approaching closer and closer. Even though a halving is an undoubtedly bullish event for Bitcoin, long-term investors prefer to buy and hodl for their lives, while short-term investors wait for a perfect moment to sell and take their profits off the table.
Multiple experts, including such renowned influencers as SkyBridge Capital founder and former White House Director of Communications expects Bitcoin to reach an enormous $170,000 after halving in the course of the current bullish cycle.
Financial guru Robert Kiyosaki, the author of the “Rich Dad Poor Dad” book, believes that by September this year BTC will skyrocket to $100,000. According to his recent tweets, he plans to buy more Bitcoin prior to the halving to increase his investment portfolio. Generally, all known Bitcoin maximalists advocate holding BTC and never selling it.
However, gold advocate and Bitcoin critic economist Peter Schiff has been predicting Bitcoin to crash soon after halving, reversing on all the gains it has shown to the market so far this year. He constantly warns the crypto community about Bitcoin crashes he sees ahead, urging investors to switch from BTC to gold.
Many experts agree that the best for short-term traders is around half a year before halving and then selling their BTC once the price peaks 1 or 1.5 years after that. Another important point is that Bitcoin has so far been followed by a massive correction soon after peaking upon an occurrence of every halving.
This is partly down to the fact that many traders rush to lock in their profits and therefore, knowing about this trend, many sell their Bitcoin in order not to lose on their investments.
Besides, miners also sell large amounts of the BTC they produced before the halving in order to cover their business expenses and get some cash for themselves. This is also a major factor that adds to the selling pressure soon after a halving takes place.
Therefore, it is important to thoroughly analyze all the factors and data offered by the market, as well as see your goal clearly, before deciding whether it is worth continuing to hold BTC after the halving or hurry to tap the “sell” button.
