Its probably already time to start preparing for 2020's halving

31 Dec, 2018
by Arthur Sillers
Its probably already time to start preparing for 2020's halving

As most interested in cryptocurrency know, a fundamental aspect of Bitcoin is that every four years, it cuts in half the rewards given to miners in order to, among other things, introduce a kind of scarcity and theoretically reduce inflation. The economics behind this feature go back to the very foundational (Austrian) economics which motivated the birth of Bitcoin in the first place.

The next halving will occur in 2020, but as Coindesk points out, next year traders will start to change their behavior to prepare. Looking at the last two halving events, which occured in 2012 and 2016, there was about a year-long runup to the mining change where the price of Bitcoin increased signficantly over the year leading up to the change, and then a 'brutal parobolic move' in a few weeks following the halving.
The bottom line is that the Austrian economics underlying Bitcoins design are by no means settled, and one of the main criticisms (mostly from outside crypto circles) centers around this halving policy. Nonetheless, traders have two years of experience to know what the halving will do to Bitcoin price, and will likely want to be prepared to take advantage of it.

Bitcoin, historically has started a long term rally which begins 12 months before the halving, and ends the day it occurs. From November 2011 to the actual halving occuring, the price of Bitcoin went up 300%, and in 2015 leading up to the second halving a similar run started in July and went up about 180% to the halving being enacted. While on the one hand, this kind of speculation defeats much of the purpose behind the halving, its unlikely that Bitcoin has matured as a market well enough to get past it.
The third halving is a year and a half away, and its about time for traders to start watching for the this run. If the past two halvings are a clue, the run is getting more subtle as more traders are involved in the marketplace, and the market matures. Nonetheless, because Bitcoin has a built in fundamental market supply-and-demand change baked into it, and speculators and Bitcoin enthusiasts alike will want to start getting ready for it now.

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Read more about: Bitcoin (BTC)

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