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The Capital

Bitcoin Halving Price Patterns Looks Way Different From Previous Halvings

When it comes to investing in bitcoin and understanding the way that it functions, the halving is an important component to consider. In previous situations and years, this has been done every four years to better control the amount of bitcoin that is mined and available at any given time. However, things have changed recently and the halving is not looking like it will continue in the same way, at least, not in the immediate future.

Previously, the halving occurred every four years and reduced the rate at which bitcoin was created. Initially the amount was 50 bitcoins, which was then halved down to 25 and, since 2016, it has been only 12.5 bitcoins. And that’s for a single fully processed block. This theory has continued on for several years, and is expected to drop again in May of 2020. However, that drop to 6.25 bitcoins per block seems to be in question with no one really knowing what’s happening or what it’s going to mean for the future. And the pandemic seems to be the cause of it.

Where old halving price patterns showed that a halving created a bull run, the new information doesn’t seem to support that same ideal. In fact, there seems to be some debate about just what the new halving could do to the field and what it could mean for bitcoin. There seems to be some speculation that a bull run may not occur or that a bull run may not be as positive in this situation, with the current market situation. Also, there is some confusion as to why exactly this situation hasn’t already occurred and what needs to happen next.

Image credit: Messari report

Halving is not something that happens on a set schedule by default. There’s actually a much more complex aspect to it and there’s far more involved in making sure it takes effect properly. This is based on a more complex understanding of the narrative and the uncertainty that goes along with the process. There’s also no real understanding of what could happen if this is done again. In fact, there have only been two bitcoin halvings carried out yet. And while they both created the same situation, there’s no way to know for sure that this will continue.

Image credit: Messari report

At this point, the halving doesn’t look the same as what it was, and there’s no indication that it will carry on in the same way. Pricing previously continued to increase not only up until the halving but through it as well. Now, it seems that pricing is fluctuating and there is no real understanding of what will happen next. In fact, there’s very little to base a thorough evaluation on and there’s no way to know if the $2.9 billion investment needed in order to offset the deflation that would naturally occur with this halving would actually happen. This creates even further uncertainty and makes it far more difficult for anyone to predict whether this halving is priced in, or not priced in and whether it will follow the old pattern.

Author: Marko Vidrih

Featured image credit: Pixabay




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Marko Vidrih

Marko Vidrih

Most writers waste tremendous words to say nothing. I’m not one of them.

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