Will Bitcoin Goes up after the May 2020 Halving?
Bitcoin was developed in 2009, since developed the event of halving is arranged after every four years in an attempt to shoot the prices by creating scarcity in supply. A countdown has been started as 4th halving is going to be held on 18th May, 2020.It is important to understand the concept of halving so let’s relate it with paper money.
The production of real money is controlled by government authorities, they adjust the supply in accordance with demand and in case of any economic turmoil they can increase the production of money on urgent basis. Similarly, Satoshi Nakamoto has designed a mechanism for bitcoin supply known as “Halving”.
As we know bitcoin are produced through mining which is a process of solving complex computational puzzles and in reward miners receive bitcoins. The amount of reward to miners is halved after four years or when approximately 210,000 news blocks are discovered. The process of halvening will continue to proceed until 21 million bitcoins has been generated via the network.
Halving is an important event for bitcoin traders because it will affect the demand and supply of bitcoins in the market. In last halving on July 16, 2016, the reward was reduced to 12.5 new BTC such reduction in supply did not shoot up the price rather prices decreased by 10%, but then rates increased where is it was before. Experts called that event as “boring vindication”. However, last halving had long term affects, initially prices fell and with the passage of time prices continue to increases and break the previous records.
Keeping in mind the last time experience, we cannot predict any sudden price boosting but the prevailing economic situation may contribute in shooting the prices up. Moreover, it is a proved theory that when supply decreases, demand will eventually increases and so the prices. May 2020 halving will cut the reward to 6.25 BTC and it has been anticipated that this reduction will definitely increase BTC price. Experts are predicting that the results will be same the previous two halvening event i.e. in the short run prices fell but with the passage of BTC will experience a rise in price rates
Therefore, May 2020 halving will increase the prices of BTC. Traders should take precautionary measure before event so that they can safe themselves from any unseen losses. One such measure can be holding.