Hello, lovely fans of digital money!
Today, I’d like to talk about bitcoin halving, which has been the talk in the Bitcoin community.
It may have been mentioned that with this happening, Bitcoin price is expected to shoot up.
But is it true?
let us look at this thing.
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First, what actually is halving?
Well, every few years or so, new amounts of Bitcoin being generated are actually reduced by about fifty percent.
It’s like you were getting five cookies daily and then all of a sudden you get only two-and-a-half cookies. Fewer cookies right?
Similarly, less bitcoin signifies decreased supply in the market place.
Now, basic economics tells us that if there is less of something but people still want it anyway, its price typically goes up. This reminds me when there is one lonely piece left at a party; everyone wants it badly. Believe you me someone will pay extra for that last slice!
So if Bitcoin supply is cut in half, shouldn’t price rise logically?
Also, according to history. Its price almost doubled in a few months after the last halving in 2016. It was like magic.
But now here’s where things start getting interesting at least:
The same can’t be said of Bitcoin this time around in 2020 when the halving took place as it didn’t do much to its price.
Think of waiting for popcorn to pop and it never does, just nothing.
Some people blamed it on the global pandemic being too much in focus but I have my doubts.
I think that it was very clear even before any other person could see from a distance that the halving was imminent. This is like knowing what present you are going to receive before opening it. Once everyone knows what’s going to happen next, then they start preparing for it ahead of time. Therefore, when the halving finally occurred, this was kind of like “ho hum we all anticipated.”
Just like when your preferred band announces a sudden album drop and you have already heard leaked songs. The excitement just isn’t the same when you already know what’s in store.
But wait!
I’m not saying that halving is absolutely uninteresting.
On the other hand, it’s still a big thing. Reducing supply of Bitcoin means that there is less of it out there. And if more people keep on demanding it, well, do the Math. However, maybe we should not expect fireworks to be shot every time the halving comes calling.
Think of it this way; imagine you are having a surprise birthday party and all your friends have been talking about it for weeks; then how much of a surprise would that be?
It’s similar with halving. If everyone has already factored this into their sums, then why should we expect any abrupt change in price?
So what would be my take on all this? Well, I think it's unwise to bet everything on halving. Yes, it’s a cool event and does affect Bitcoin’s supply and demand dynamics. But there are also other elements that we should not forget.
Bitcoin price is like a recipe with twelve ingredients. Halving is only one of the spices in this mix. Besides, you have market sentiment, acceptance rates, regulatory news and many other things boiling over there.
Therefore, as much as the halving may add some taste to the whole mixture; it will not break or make the dish.
Ultimately, as much as the value of bitcoin fluctuates following halving, it’s just a part of the wild ride in crypto land. So brace yourself for an eventful trip regardless; but also consider shaking some salt or even a little bit of bitcoin.
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There you have it guys!
That is why Bitcoin halving may not send prices to moon every time according to me. What do you say? Am I right or am I barking at the wrong blockchain? Leave your feedback below.