The third halving of bitcoin is scheduled for early May 2020. The event is long awaited by the cryptocurrency market as it can be a trigger for rising prices, as it was in the previous two halvings. The possible impact on the price is mainly due to the reduction in supply. Therefore, if the other variables are held constant – demand, for example – the trend is that there is a positive impact on prices.
The reduction in supply is due to the halving of the reward paid to miners. Today, with each block of the chain resolved, miners receive a reward of 12.5 BTC. From March 20, this reward will fall to 6.25 BTCs. And every four years there will be further cuts, in half.
There will be a total of 32 bitcoin halving events. Once all of them has happened, there will be no more halvings and there will also be no more bitcoin creation. The last of the 21 million bitcoins is expected to be mined in 2140.
Bitcoin’s third halving already brings appreciation
On previous occasions, the bitcoin showed strong movement six months before halving. The mining reward was reduced from 50 BTC to 25 BTC in November 2012. At the time, bitcoin went from US$5 to US$16 by mid-August, setting a new base at US$ 10 in November.
Similarly, the BTC jumped from US$ 360 to US$ 780 in the four months to mid-June 2016, before earnings were reduced to US$ 465 in August, when the reward was reduced from 25 BTC to 12.5 BTC. The same is happening now. From December to mid-March, the cryptocurrency gained about 19% in value.
In addition, in the previous halving, the bitcoin experienced, just over a year later, a valuation of almost 30 times, jumping from US$ 650 to US$ 19,497.
Analysts say that with the increasing adoption and the asset characteristics not correlated to traditional financial markets, the trend is that the demand for the cryptocurrency should increase. Therefore, there is one more element of pressure to raise prices. Another fact is that more and more institutional investors are looking to compose part of their wallets with encrypted digital assets