What is Bitcoin Halving? What Do New Zealand Investors Need to Know in 2020
In approximately 12 days on the 12th of May, the 2020 Bitcoin halving will commence – and the block reward for the Bitcoin miners will reduce 50% –.
In approximately 12 days on the 12th of May, the 2020 Bitcoin halving will commence – and the block reward for the Bitcoin miners will reduce 50% – from 12.5 to 6.25 Bitcoin per block reward.
The Bitcoin Halving is a fundamental part of Bitcoin’s code, where approximately every four years (or every 210,000 blocks), the Bitcoin blockchain autonomously reduces the amount of Bitcoin released into circulation by half – defining BTC as a deflationary asset.
Why does the Bitcoin halving matter?
- Past halving events have seen the Bitcoin price soar by as much as 13,378%.
- This is the third Bitcoin Halving, following the BTC halvings of 2012 and 2016.
- The Bitcoin price skyrocketed following the 2012 and the 2016 halvings, and hype is rapidly escalating around if 2020’s halving will fulfil the prophecy that Bitcoin halvings equal guaranteed positive price explosions. ????
Over April 2020, Easy Crypto NZ customers were been busy stocking up their BTC reserves in preparation for what price action lies beyond May 12th.
If you’re looking for a safe and easy place to buy Bitcoin in New Zealand, you’ve come to the right place. ????
Will the Bitcoin Price Explode After the Bitcoin Halving of 2020?
There have been two previous Bitcoin halvings, in 2012 and 2016, with Bitcoin’s price rocketing in the months following both events. As Bitcoin mooned in price after the previous events, so did the price of most other altcoins in the market.
There is no guarantee that this time round will paint a similar picture, but what we can confirm is that anticipation for the halving is at record highs – and that Easy Crypto NZ customers are stocking up their Bitcoin reserves in preparation.
What Will Happen During the 2020 Bitcoin Halving?
Every day, millions of Bitcoin miners contribute computing power to the Bitcoin network to process transactions ⛏️
Whenever people buy, sell, or transact Bitcoin, the Bitcoin network encrypts transaction information and bundles groups of transactions into blocks of code. It is the job of miners to crack the encryption of these blocks and verify transactions inside.
To understand the Bitcoin halving, it is first a good idea to understand the basics of Bitcoin mining.
As mining requires significant investment, miners who want to stay in business will have to charge more for Bitcoin they sell on the open market. This (in theory) will push Bitcoin prices higher. However, other factors can also influence Bitcoin prices.
- Fewer Bitcoin entering circulation increases the scarcity of Bitcoin.
- 85% of all available Bitcoin is already in circulation. This gives Bitcoin comparable scarcity to precious metals like gold.
- Past Bitcoin halving events have seen investors rush to buy Bitcoin just before and after halving, while prices are still low.
Lessons from Bitcoin Halving History
Bitcoin halving events take place approximately every 4 years. To date, there have been two halving events. Both have seen the Bitcoin price skyrocket. What everyone, therefore, wants to know, is will this trend repeat in 2020?
As a rule, there is no way to guarantee how the cryptocurrency market might react to the next Bitcoin halving. However, there are reasons for investors to be positive.
Bitcoin Today is Better Established Than in 2016
When the Bitcoin block reward was reduced in November 2012 and July 2016, Bitcoin wasn’t nearly as well known as it is today. Since then, Bitcoin has gone mainstream.
- Major brands like Burger King now accept Bitcoin payments in some locations.
- Bitcoin futures trading has gone mainstream.
- Major financial institutions like J.P. Morgan Chase & Co now recognize Bitcoin as a mainstream investment asset.
With Bitcoin adoption levels higher than they have ever been, some speculate that 2020’s halving will mirror past halving events. Some technical indicators also suggest that major gains might be likely.
Technical Reasons to Get Excited About the 2020 Halving
2018 to 2020 has been a turbulent period for Bitcoin. In December 2018, the Bitcoin price fell to a low of $3,152 USD. Curiously, though, this occurred 519 days before halving in May 2020. This is significant as the last time Bitcoin reached a major bottom was 544 days in advance of the 2016 halving.
In the 12 months after bottoming, past trends also show Bitcoin prices appreciating by 340% to 380%. At present, a case can, therefore, be made that Bitcoin may be on the cusp of a major breakout.
Of course, no one can say how Bitcoin will perform in 2020 with any certainty. As a result, Kiwis should never risk more than they can afford to lose if they do invest.
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Disclaimer: This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated December 8, 2021