The time has come: on Tuesday the Bitcoin block reward will be cut in half.
That means, instead of 12.5 Bitcoin for a successful block, the miners will only receive 6.25 from now on. As a result, a lot less new Bitcoin will come into circulation. It will be more difficult to buy Bitcoin, because a lot less will be available.
This halving takes place every 210 000 blocks - roughly every 4 years. The first halving happened in 2012 and the second in 2016. In both cases the Bitcoin price went up 10x in the year after the halving. After 2012 it went from approx. $100 to $1,000 and after 2016 from $1,000 to $10,000.
So, many people hope for a $100,000 Bitcoin in 2021 of course.
Does past performance predict future performance?
If the increased scarcity and decreased inflation were the only indicators that contribute to the Bitcoin price, then it might behave the same way. Add to that the fact that way more people know about Bitcoin now than 4 or 8 years ago. So there might be a much higher demand for a decreasing supply. That would definitely drive the price up.
However, we also live in completely different times now than during the past two halvings. There are much bigger players on the field now - institutional investors - and there are Bitcoin futures contracts now, which didn't exist 4 years ago yet. Both can heavily influence the price and "move the market".
Bitcoin's big test
Also, this is the first time the halving takes place in an economic crisis. While Bitcoin was born during the crisis of 2008, this will be its first big test. Will it do what it has been designed to do? Can it provide a "save haven" for people to store their wealth?
And what about all the other coins - will we see another bull run like we saw in 2017?
Nobody knows. I am just as curious as you.
I will keep on "hodling" my Bitcoin and my other favorite coins long-term. I do not expect the volatility to decrease until at least the next halving. By then, I'm sure we will not only live in a different world, but in a completely different financial system, without physical cash and only with digital currencies.
We will have the e-Dollar and the e-Euro (if those two currencies still exist by then. I believe they will either be gone or only exist digitally anymore.) We will also have Facebook's Libra coin - in whatever shape or form - and potentially an Amazon- and Walmart- and Whatever-Coin as well. Once Facebook will have succeeded in launching its coin, it will open the floodgates for other Corporate Coins.
There will be many national, centralised and decentralised currencies and they will all exist in parallel. I can imagine it being quite confusing. But during the next 4 years, every single person on the planet will get acquainted with digital currencies. And hopefully in 2025 after the next halving, people will gain more clarity on how Bitcoin is different from the national currencies and the centralised and corporate ones, and by then they will have enough incentive and motivation to opt for Bitcoin and decentralisation.
Just my 2 satoshis and future predictions :) Please don't believe me and base your investment decisions on your own research and beliefs.
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