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As of this writing, Bitcoin is currently trading at $7,977, down from yesterday’s value of around $8,200. But the leading cryptocurrency by market capitalization could experience a massive upward trend next year.
The speculation hinges on the fact that Bitcoin will experience another halving that’s slated to occur in May 2020. So what is this halving and why is it so special?
Put simply, the halving is where miners’ reward for minting Bitcoins gets cut in half. At the moment, miners are given 12.5 Bitcoins for each verified transactions but that will change to 6.25 next year, CoinTelegraph reported.
Bitcoin’s scarcity
This is significant since Bitcoins are algorithmically limited, meaning only a set amount of the cryptocurrency can be mined. As scarcity becomes more pronounced, Bitcoin becomes more valuable as miners would either stop mining or hold on to their Bitcoins creating more shortage.
Of course, history dictates that only a small amount of miners would walk away, while the rest continue to mint more. Both will hold on to their Bitcoins, however. History also reveals that for each halving, Bitcoin volatility experiences massive swings 12 to 18 months after the event takes place.
Bitcoin’s halving history
For instance, the first halving occurred in November 2012 where Bitcoin’s price went from $1 to $11. A year later, its value skyrocketed to $1,100. Following that, it took a nosedive and hovered between $220 to $240 in the next three years.
The second halving occurred on July 9, 2016, where its price rose from $220 to $580 before spiking yet again and reaching $20,000 in 2017. And similar to the first event, the value plummeted and fell to $3,000. However, the bulls have done a good job of pushing its price higher in recent months, reaching $10,000 but failing to break through resistance levels at the $14,000 mark. And now it’s currently at $7,977.
It’s important to note, however, that for each halving that occurred, the crypto space has matured considerably. Regulators and lawmakers are keeping a close eye on Bitcoin, while a lot of traditional investors are still hesitant to get on the action.
Of course, the blockchain ecosystem is still growing in popularity, thanks in part to the projects of corporate giants like Facebook Libra and other such endeavors. And although the Bitcoin community has big hopes for the third halving, others are advising caution including Bitmain CEO Jihan Wu, Forbes reported.
