Ultimate Bitcoin Halving / Halvening Overview

Jan 12, 2020

📝 Simple Overview 📝

The Bitcoin halving is perhaps one of the most hyped events for 2020, fueling rife and wild speculation from crypto holders, analysts and news publications alike.

₿ What is the Bitcoin halving? ₿

The Bitcoin halving happens roughly every four years and is when the mining reward for Bitcoin is cut in half. This effectively cuts Bitcoin inflation by reducing the number of coins entering the market.

📈 The Halvings Impact On Bitcoin’s Price? 📈

Bitcoin’s current inflation rate (pre-halving) is 3.6% per year. However, the May 2020 halving will reduce the rate of inflation to just 1.8%.

At the time of video release, the average miner cost to produce a Bitcoin stands at $6.3K. This means that miners need to sell roughly $11 million in Bitcoin every day to cover production costs.

After the halving, miners will only earn half the number of BTC and this means less miner selling. If the demand for Bitcoin stays the same, this should increase the price.

⌛ What Happened In Past Bitcoin Halvings? ⌛

Bitcoin increased in price by 9200% after the first halving and about 3000% after the second halving. The time it took to reach a market peak has taken progressively longer in subsequent halvings.

Although we have very few data points, one thing seems quite clear: Bitcoin does seem to go on quite a bull run after the halving.

🏦 Stock To Flow Model 🏦

This model is used commonly in the traditional financial markets to value commodities like gold and silver. According to NewsBTC, the Stock-to-Flow model has predicted the Bitcoin price with an astonishing accuracy rate of 99.6%. Incredibly, this financial model predicts a $94K Bitcoin in May 2021.

🤼 What Crypto’s Thought Leaders Are Saying? 🤼

► Digital Asset Research: $60K Bitcoin by May 2020

► Kraken CEO, Jesse Powell: $100K to $1M Bitcoin.

► Anthony Pompliano, co-founder of Morgan Creek Digital Assets: 75% chance of $100k BTC by 2022.

► Billionaire investor Tim Draper: $250k BTC by end of 2023.

🔽 BTC Supply Is Smaller Than You Think 🔽

Chainalysis estimates that, out of BTC’s 18 million circulating supply, around 4 million Bitcoins have been lost forever. That means that if the demand for Bitcoin increases, new dollars entering crypto could be chasing way fewer Bitcoins than people think. Put simply, increased demand and smaller supply typically mean higher prices.

📋 This Halving Could Be Different 📋

We’ve never gone into a halving before with readily available futures markets or leveraged trading platforms. Currently, futures markets account for around $200M in daily Bitcoin trade volume (with BTC priced at $8K). Major leveraged trading platforms like BitMEX, Bybit, and Binance account for another $8 billion of trade volume a day. That’s around a quarter of Bitcoins reported trade volume according to Coinmarketcap.

📊 Increasing Hash Rate 📊

The Bitcoin hash rate is currently going through the roof. This is not a surprise given that miners have a closing window of time to collect 12.5 BTC block rewards before these are cut by half.


⛓️ 🔗 Helpful Links 🔗 ⛓️

► BTC halving countdown: https://www.bitcoinblockhalf.com/

► Halving stats: https://hackernoon.com/how-much-shoul...

► CoinShares report: https://coinsharesgroup.com/assets/re...

► Past halving price chart: https://masterthecrypto.com/wp-conten... .

►Live Stock-to-Flow chart: https://digitalik.net/btc/

► Stock-to-Flow comparison chart: https://www.getrevue.co/profile/zpx/i...

► Credit Suisse’s Global Wealth Report for 2019: https://www.credit-suisse.com/about-u...

► Bitcoin hash rate chart: https://www.blockchain.com/en/charts/...


📜 Disclaimer 📜

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.