Bitcoin Halving 2020

Bitcoin began 2019 at lows that would have been unthinkable a year earlier. At the start of 2018, Bitcoin was still riding the huge wave of optimism and speculation that pushed it to its all-time high of almost $20,000 in late 2017. But a brutal year-long bear market in 2018 brought Bitcoin down to lows close to $3,200 by December. Bitcoin’s overall trajectory has been upward in 2019, breaking above $10,000 several times this summer. However, these breaks above $10,000 haven’t been sustained and the price is once again sliding with 2020 around the corner. So what is the outlook for Bitcoin’s price heading into the next year?  With the last bitcoin halving occurring on May 11th, 2020, is there any chance the Bitcoin price it could surpass its previous all-time high after the next Bitcoin Halving?

When Is Bitcoin Halving?

The big event to look out for is Bitcoin’s regular halving of mining rewards. The rewards halving is scheduled to occur every time 210,000 blocks have been added to Bitcoin’s blockchain, which works out at once roughly every four years and so the rewards sent to Bitcoin miners for completing transactions cuts in half.  When this occurs, this slashes the rate in half where new Bitcoin is released into circulation.  Previous halvings in November 2012 and July 2016 were followed by huge price surges that pushed Bitcoin’s price to new levels.  The last bitcoin halving 2020 occurred on May 11th with the next one predicted on May 18th, 2024.

Previous important Bitcoin halving dates include:

01/03/2009 – Genesis block established

10,500,000 BTC created

11/28/2012 – 1st Bitcoin Halving Date

5,2500,000 BTC created

07/09/2016 – 2nd Bitcoin Halving Date

2,625,000 BTC created

05/11/2020 – 3rd Bitcoin Halving Date

1,312,500 BTC created

Source: Wikipedia.org

View our next bitcoin halving countdown here.

The regular halving of Bitcoin mining rewards was built into the protocol as a way to control inflation. Bitcoin miners currently generate an average of 1,800 new bitcoin each day. Each Bitcoin halving cuts this reward in half, so assuming that Bitcoin network’s mining power remains the same, there should be half as many new bitcoins being created. With a hard limit of 21 million bitcoins ever to be created, simple economic laws of supply and demand suggest that less new bitcoins should lead to an increase in the value of those already on the market.

This logic is well-known within cryptocurrency communities and it prompted a lot of excitement around Litecoin earlier in 2019 as that cryptocurrency approached its own block reward halving. Litecoin was one of the best performing cryptocurrencies in the first half of 2019, rising from $30 at the start of the year to over $142 by late June. However, the price stumbled as the August 5 mining reward halving drew near and has continued falling since. By late September, Litecoin had shed much of the gains made in the run-up to the halving and fallen to less than $55.

Bitcoin is now a much better-known phenomenon than it was in the build-up to the 2012 and 2016 reward halvings. Previous halvings were followed by gradual price growth that only exploded into out-of-control bull runs many months after the halving had occurred. Some caution that because the phenomenon of previous halving leading to bull markets is so well-known, Bitcoin could see a similar price pattern to that experienced by Litecoin. But whatever happens, the next reward halving will be a pivotal moment for Bitcoin’s future price trajectory.

The Historical Upward Trend

One argument often referred to by long-term Bitcoin supporters is that the price is generally moving in an upward trajectory year-on-year. Bitcoin often surges to new highs before falling back, sometimes hitting highs that it takes several years to reach again. However, looking at yearly lows paints a much more positive picture of Bitcoin’s overall price trajectory. The lowest point Bitcoin reached in 2012 was $4. For 2013, that rises to $65. Then $200 for 2014, $185 for 2015, $365 for 2016, and $780 for 2017. Despite the negativity surrounding Bitcoin’s price collapse in 2018, the lowest point it reached was $3,200. Bitcoin began 2019 trading at $3,774 and reached its $3,339 low point for the year in early February.

If history repeats itself, Bitcoin won’t necessarily eclipse its December 2017 all-time high in 2020, but it will continue the long-term upward movement it has enjoyed over the ten years that it has existed.

The counterpoint to this is the investing mantra that past performance is no guarantee of future results. And the trend also looks weaker heading into 2020 than it has in any previous year. Bitcoin’s all-time low in 2013 was more than 16 times higher than its low for 2012. 2014 and 2015’s lows were both around three times higher than the previous year. 2016 and 2017’s lows were a little less than double the low of the previous year. Following the insane speculation surround the 2017 bull run, 2018’s low was more than four times higher than that for 2017. But the current lowest price Bitcoin saw in 2019 was less than 5% higher than the low for 2018. Could 2020 be the year that ends Bitcoin’s run of posting higher yearly lows?

Is Bitcoin Still the Hot New Tech?

Bitcoin celebrated its tenth birthday in 2019 and it has gone much further than many expected in penetrating the mainstream consciousness. At the same time, a decade is an eternity in the world of technology and Bitcoin may have lost some of its cutting-edge appeal.

In 2015, Vitalik Buterin and others developed Ethereum, after growing frustrated with Bitcoin’s technological limitations and inflexibility. Ethereum added a raft of new features and functionality to Bitcoin’s blockchain-based decentralized currency, making it possible to deploy smart contracts and decentralized applications (dApps) over the blockchain. In 2017, arguments over how best to speed up Bitcoin’s transaction times and reduce network fees led to a hard fork in the Bitcoin network and the creation of Bitcoin Cash. In late 2018, Bitcoin Cash itself controversially split into two competing cryptocurrencies, Bitcoin Cash ABC and Bitcoin Cash Satoshi’s Vision.

Throughout the initial coin offering (ICO) boom in 2017, countless new cryptocurrencies were created. While many of these were scams and cheap attempts to make a quick buck off the hype surrounding cryptocurrency, some have introduced new features and functions that their supporters claim make them far superior to Bitcoin. For example, both IOTA and NANO use an innovative next-generation blockchain set-up known as a directed acyclic graph (DAG) ledger that theoretically allows for unlimited transactions to be occur in parallel with near-instant transaction times and little or no transaction fees.

Despite the hype that has been attached to other projects, Bitcoin is still by far the most dominant cryptocurrency. While Bitcoin recovered more than half of its all-time high value during the summer of 2019, most other cryptocurrencies are today worth a fraction of their 2017 and 2018 peak values. Many projects have been hit with exit scams or troubled with technical issues that have caused much of the excitement around them to dissipate. Bitcoin may no longer be bleeding-edge technology but it remains as dominant within the cryptocurrency space as it has ever been.

Directly updating Bitcoin requires network-wide consensus that has repeatedly proven impossible to achieve. However, solutions to make Bitcoin more effective as a currency have been introduced as extra layers build on top of the existing Bitcoin network. The best-known of these is the Lightning Network, which creates payment channels between users that allows for much faster and cheaper transactions than those broadcast to the entire blockchain. Statistics show that the Lightning Network experienced enormous growth between April 2018 and April 2019 but adoption has since slowed, with a gradual decline each month since its peak use in April 2019. Whether solutions such as the Lightning Network will be a viable long-term answer to Bitcoin’s scaling issues remains to be seen.

Can Bitcoin Hit a New All-Time High?

Most Bitcoin supporters remain as convinced as ever that Bitcoin will eventually reach highs far beyond its December 2017 peak. Nobody can say with any certainty whether these new highs are on the horizon for 2020, or even if they will ever materialize. But with Bitcoin’s next halving taking place early in the summer of 2020, the price movement in the second half of 2020 is likely to provide a very important indication of Bitcoin’s long-term trajectory.