Bitcoin Halving is a hot topic in the cryptocurrency industry right now. It is often used in connection to the price growth of Bitcoins. What is Bitcoin Halving? And how can you prepare for it? The reward given to Bitcoin miners who add a block to the Blockchain is split in half every 4 years (210K blocks). Satoshi Nakamoto created the Bitcoin halving to keep Bitcoin’s inflation in check. What does Bitcoin Halving mean?
How do you prepare?
The point at which new coins are created means that the money supply increases by a projected amount. However, inflation does not automatically rise at this point. Rates will remain constant if the money supply grows at the same pace as the number of people using it. If it doesn’t grow at the same rate as demand, there will likely be deflation. Early holders of money will see their value rise if they don’t. A fixed rate seems to be the best way to allocate coins.
According to market rules, supply and demand are the dominant forces in the market. The price of goods will fall if demand remains constant. If demand were constant, then the price would fall more slowly after halving (supply will decrease by half).
Market Power
The dominant market power is, however, fluctuating demand driven primarily by emotions and the psychology market players in crypto market. It is generally believed that decreasing supply will raise the price. The stock-to-flow ratio, which is the ratio of supply to demand, seems to show that there is a link between the halving block reward and rising price. This can also explain why cryptocurrencies have grown in popularity. This view is largely unilaterally expressed in the media, which increases demand as everyone wants to make a profit from the supposedly safer price rise. The prophecy is fulfilled.
The future price development for Litecoin will be an important indicator of the Bitcoin Halving. If the cryptocurrency of Halving continues its rise, it will fuel Bitcoin’s Halving hype. If this is not the case, and the cryptocurrency is more likely to lose its value, it could disrupt the stock-toflow theory which could stifle the hype. Because if one controls the crypto market, it is the emotions and collective psychology of market participants, and not market theories.
Bitcoin Price
The Bitcoin price didn’t fluctuate during the last Halvening. Some blame the 50% price rise (from $435 – $645) in three months prior to the reward cut. However, there is little risk of establishing causation. The network was relatively routine, aside from that. The overall hash rate, which is the total computing power required to run the Bitcoin network, remained the same. This indicates that miners didn’t shut down their devices in masse to earn fewer rewards, as many had hoped.
In any event, you now know what The Halvening really is and why it’s not something to be afraid of. This countdown timer will show you exactly when the next one will take place.