Bitcoin “halving”, what’s next?

Central banks across the world are printing money to keep the global economy afloat but the most popular digital currency in the world, Bitcoin, has done the exact opposite.

The Bitcoin third block halving event took place this Monday. Every four years the amount a bitcoin minor receives is cut in half as a deflationary measure. The Bitcoin reward has gone down to 6.25 BTC from 12.5BTC. The next halving event will be in 2024 and will reduce the number of new bitcoins issued to 3.125.

The algorithm behind the halving is designed to limit the total number of Bitcoins issued. Once the finite number of 21 million coins are generated, the network will stop producing more. We are currently at 18.3 million BTC in circulation or 85% of the total cap.

In anticipation for the event, the prices of Bitcoin increased the past few weeks. From around $4,100 in middle of March to just shy of $10,000 on May 6. Now the event is a fact, the prices have fallen back to about $8,700.
Experts say that demand for Bitcoin may grow higher as investors view it as safer than government supported paper currencies in the time of Covid-19 and the unprecedented easing measures from the central banks.

Jean-Marie Mognetti, CEO of CoinShares – a digital asset manager said:

The rest of the world needs to either keep printing money or see their own currency eroding drastically in front of the unbeatable dollars. Turkey, Brazil, or Argentina are the perfect examples of this.

Consequently, in a world where investors continue to seek protection for their portfolios against the world’s Central Bank’s behavior, bitcoin, a digital currency whose supply is programmatically defined to reduce until it reaches its maximum supply, would seem to be the perfect hedge for any institutional investor portfolio.

Crypto investors have pointed out that Bitcoin prices drop after each halving event and it can be observed in the first few months after the halvings in 2012 and 2016. And it’s expected to happen again this year, especially because of the circumstances. However, experts have a positive outlook and some expect Bitcoin prices to grow higher in the future.

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