What is Bitcoin Halving? Could it start bull market with BTC to $100k?
What is Bitcoin halving?
New bitcoins are issued by the Bitcoin network every 10 minutes. For the first four years of Bitcoin's existence, the amount of new bitcoins issued every 10 minutes was 50. Every four years (around 210k blocks), this number is cut in half. The day the amount halves is called a "halving".
The bitcoin halving was also intended to emulate gold-mining, as gold-mining becomes more expensive and difficult over time, as more and more of the Earth’s gold reserves are mined out. Not only does it get more expensive, but less than mask new gold enters the gold marketplace each year.
In 2012, the amount of new bitcoins issued every 10 minutes dropped from 50 bitcoins to 25. In 2016, it dropped from 25 to 12.5. Now, in the 2020 halving, it will drop from 12.5 to 6.25.
Why is important?
The halving decreases the amount of new bitcoins generated per block. This means the supply of new bitcoins is lower. In normal markets, lower supply with steady demand usually leads to higher prices. However is that the case?
Looking at the past Bitcoin’s price has shown patterns with block reward halvings. We have seen a couple of these cycles where the tide begins to shift roughly a year in advance of these dates.
Will it happen?
Past performance does not guarantee future results - this is a phrase that is being commonly used. However if we look at the past we can see the patterns which can be useful in potentially predicting future.
In the past we have seen a couple of cycles where the bear/bull tide begins to shift roughly a year in advance of the halving dates. This means the halving did usually kickstart a bull market and considering how long the current bear market has been it wouldn't be crazy to expect the same.
The next halving is estimated to arrive around 20th of May 2020 (the date is estimated because it is based on the block number)
Is all of it true?
Inflection points (lowest price) occurred 376 and 320 days prior to the 2012 and 2016 “halvings”, respectively. Taking their average of 348 days could indicate a bottom on June 10, 2019.
Does that mean Bitcoin will go lower? Not necessarily since this is an average and every bear/bull market cycle needs to be considered on individual basis.
However the overall conclusion from the halving is that the Bitcoin prediction for 2020 should be very optimistic when we analyse the history and also look at how long the current bear market has been.
This is not a guarantee but something that could potentially happen.