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An Ultimate Guide About Bitcoin Halving to Learn in 2020

An Ultimate Guide About Bitcoin Halving to Learn in 2020

What is Bitcoin Halving 2020?

The Fateful Year 2020

Because the Bitcoin father Satoshi Nakamoto built a special feature into the code: every four years, the number of bitcoins distributed is halved. Because people run the Bitcoin network on their computers, they get a reward. As mentioned, there was initially 50 Bitcoin per block. On a regular, a block is created every 10 minutes. After four years, this value halved to 25 Bitcoin per block.

We are currently at 12.5 Bitcoin every ten minutes. And after halving in May 2020, only 6.25 Bitcoin hits the market every ten minutes. That’s 85 percent of all Bitcoin that will ever exist. Because at 21 million it’s over. That is also in the code. Therefore, if you still want to buy Bitcoin with Credit Card, do it now!

But how do I know whether Bitcoin is cheap or expensive? Trace Mayer has come up with an indicator for this: the Mayer multiple. It divides the Bitcoin rate by the 200-day line – i.e. the average of the rate for the last 200 days.

If the value is below 2.4, then it is worth buying. Bitcoin is too expensive above 2.4. Mayer found this out through the historical courses. In mid-October, the Mayer multiple was 0.95. A very favorable value, given the historical mean, is 1.39. If you want to invest in Bitcoin, you should be aware of the risk and keep the amount low.

The Fateful Year 2020
The Fateful Year 2020

How can the Bitcoin halving 2020 be traded?

  • Open trading account in Trade risk-free on a demo account or open a live account when you are ready to trade for real money.
  • Trading CFDs. CFD trading enables you to speculate on rising and falling prices of cryptocurrencies without owning the underlying coins.
  • Open the Bitcoin trading ticket. You can choose the trade size and add stops and limits so you can control your risk.
  • Place your first trade. Take benefit of the influence that permits you to open a position with just a small deposit.
  • Close your position. In CFD trading, losses can be offset against profits for tax purposes.

When Is the Next Bitcoin Halving Coming Up?

The last Bitcoin halving took place in the week after May 18, 2020, when 630,000 blocks have been mined. As a result, the reward per mined block is halved from 12.5 to 6.25 Bitcoins. Bitcoin halving take place every 210,000 blocks through 2140 when all 21 million bitcoins have been mined.

When Is the Next Bitcoin Halving Coming Up?
When Is the Next Bitcoin Halving Coming Up?

Will Bitcoin Go Up After Halving?

Bitcoin is still considered the most important cryptocurrency. Even in 2020, it is unlikely that this situation will change. However, the next halving is imminent and could have a major impact on the price of BTC and other altcoins – after all, there was always a price rally for altcoins too.

A appearance at the past shows that there is potential for a price gathering. After all, the price must inevitably rise to ensure profitable mining. Also, declining confidence in central banks is causing investors to look for alternative assets like Bitcoin.

The opinion of the crypto experts is also fundamentally positive so that a bull run is possible. Accordingly, the Bitcoin price could break new record levels in the coming months. Investors who do not yet have their Bitcoin position can still benefit from fair prices and build their position.

How Will Halving Affect Bitcoin?

The reward halving serves an important purpose

The intention behind Bitcoin is not just to develop a decentralized, and digital currency that is independent of governments and institutions. Rather, a cryptocurrency should be created that is more secure, and above all, more stable than classic currencies. To understand this intention, however, we have to take a closer look at the known currencies and gold as an asset.

Our monetary system today consists of innumerable currencies that have no real equivalent. While the gold standard, which secured the value of the US dollar through gold, still existed until the 1970s, it no longer exists today. Accordingly, the values of the banknotes have completely decoupled from the actual material value – we’re talking about fiat currencies.

How Will Halving Affect Bitcoin?
How Will Halving Affect Bitcoin?

The central banks regulate the number of fiat currencies as part of the classic monetary policy. The well-known quantity equation makes it clear that politics has two levers to influence the economy:

  • Control of the money supply
  • Control of demand

In times of crisis it has been shown that adjusting the money supply is a simple way of influencing the theoretical construct. By increasing the money supply, consumption should increase and the economic output of a country should increase. Such an adjustment of the money supply simply could not take place with the corresponding collateral with gold.

The maximum availability of gold is limited and the gold mines cannot extract an infinite amount of precious metal per year. Accordingly, gold has comparatively constant inflation of 2 to 3 percent per year. This is just not the case with sanction moneys.

A few historical examples make it clear that the prices of goods sometimes rise faster. After increasing the money supply, an equalization must take place on the right side of the formula – the price level rises.

However, Bitcoin as a digital currency predominantly has the properties of gold. The maximum supply is limited, making the coin a rare commodity. Also, miners have to actively mine the coins – another parallel to gold.

Bitcoin halving reduces the reward miners receive for completing a block. However, this also means that there are simply fewer coins in circulation.

We have already noted that miners will receive BTC for completing a block. They also benefit from the transaction fee for each block. Thus, mining is an attractive option to earn coins. However, the competition has become stronger in recent years, so that the market is dominated by professional mining farms and mining pools.

Investing in bitcoin
Investing in bitcoin

Mining in the proof-of-work algorithm is particularly time-consuming. The energy costs are high. The reward must therefore be higher than the cost of mining. fbitcoinThe logical consequence of this assumption – if the amount of the Block Reward falls, the price must be adjusted.

Let’s say a BTC costs the equivalent of $ 8,000. However, the price for completing a block is $ 80,000. With a reward of 12.5 BTC, the miner earns $ 100,000 and has a margin of $ 20,000. If there is no price adjustment after the halving, the net income is only 50,000 US dollars. All of the mining becomes unprofitable. To achieve the same margin, the price of a BTC would have to double to $ 16,000.

Halving 2012: In December 2013, BTC hit a price of over $ 1,000

Halving 2016: In December 2017, BTC was trading at $ 19,700.

Impact Of The Bitcoin Halving 2020?

If we take the experience from previous halving’s, a pattern emerges – prices are rising. However, there is no uniform agreement among specialists. Some see the changed framework conditions critically because Bitcoin has become more mainstream. More and more investors are trading in Bitcoin derivatives and thus influencing the price.

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