- Binance makes a prediction on Bitcoin’s Halving and analyzes the most likely scenario for the BTC price.
- Binance answers essential questions to understand the past and future development of the Bitcoin Halving.
In a post on the Binance blog, the cryptoexchange answers the most important questions about the Bitcoin halving. The event will take place on May 6 of this year when the Bitcoin blockchain reaches block 630,000 and will reduce the mining reward from 12.5 BTC to 6.25 BTC. At that time, the Bitcoin supply will reach 18,375,000 BTC out of the total 21 million.
Why is Bitcoin’s Halving so important?
Binance takes a look at the halving and answers some essential questions to understand the event and its impact on the Bitcoin price. The Halving was created in 2008 to prevent the entire BTC supply from being created in less than a decade, as Binance claims. Halving takes place every 210,000 blocks and reduces BTC emissions by 50%. The first Halving occurred on November 28, 2012 when 210,000 blocks had been created.
From that point on, only 5.25 million BTCs would be created during the next 210,000 blocks until the second halving, which occurred on July 9, 2016, when the blockchain reached 420,000. The mining reward went from 25 BTC to its current value of 12.5 BTC. Since the second Halving, about 2.625 million BTC were created.
The halving, as Binace explains, is of great importance because it directly affects Bitcoin mining. Miners will have to use twice as much effort to earn 50% less than the current reward. Binace then recapitulates the previous Halving and how it has been a trigger for the rise in the price of Bitcoin. One year after its implementation the price of the BTC went from $11 to $1,100 USD and in the second Halving the price moved from $600 to $20,000 USD in just over a year.
Therefore, the event has created a high expectation in the cryptocommunity. Many expect the halving to have a similar effect as previous occasions. However, Binance reviews the opinion of analysts and concludes that the situation for this year is different;
(…) the Bitcoin halving event of 2020 can’t be compared to the previous halving events, due to several factors, such as increasing market maturity and better halving anticipation in the crypto community, as well as the possibility that the impact of halving is already priced into the current BTC prices.
Is the Bitcoin’s Halving already priced in?
As reported by CNF, the debate among analysts has been heated. There is no consensus on how the halving will affect the price or whether it is already priced in. Some have said that users and operators should consider that halving will have no effect. Melem Demiros of CoinShares shares Binance’s thesis and states that this halving will be unique and that it is impossible to make a comparison to previous years.
Other analysts like Alex Krüger have said that a discussion so long before the event is irrelevant. This argument is consistent with the historical price performance of the BTC that only reacted to the Halving 50 days earlier. In addition, Krüger stressed that the miners will be the ones to determine the outcome of the Halving and that it is impossible to predict their behavior.
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Arcane Research expects a market reaction after the event has occurred. On the other hand, Binance concludes that whatever the course of the BTC price, an attack by the bears or a move by the bulls, next May’s Halving will be a turning point in the history of Bitcoin.
The price of Bitcoin stands at $8,342, at the time the article was published, with losses of 1.50% in the last 24 hours.