Binance: Bitcoin Halving will not drive up the price

Binance makes a prediction about the Bitcoin Halving and analyses the most likely scenario for the BTC price.

Binance answers essential questions to understand the past and future development of Bitcoin Halvings.

In an article in the Binance blog, Binance answers the most important questions about Bitcoin Halving. The event will take place on May 6 this year, when the Bitcoin Blockchain Block reaches 630,000 and the miner reward is reduced from 12.5 BTC to 6.25 BTC. At that time, the circulating quantity of Bitcoin will reach 18,375,000 BTC out of a total of 21 million.

 

Why is halving Bitcoin so important?

Binance takes a look at halving and answers some key questions to understand the event and its impact on the Bitcoin price. The halving was created in 2009 to prevent the entire BTC offering from being created in less than a decade, as Binance claims. Halving occurs every 210,000 blocks and reduces BTC emissions by 50%. The first halving took place on 28 November 2012, when 210,000 blocks were created.

From that point on, only 5.25 million BTCs were created during the next 210,000 blocks until the second halving, which took place on 9 July 2016, when the block chaining block reached 420,000. The reward for the miners has dropped from 25 BTC to the current level of 12.5 BTC. Since the second halving, approximately 2.625 million BTC have been created.

As Binace explains, the halving is of great importance as it has a direct effect on Bitcoin mining. The miners will have to work twice as hard to earn 50% less than the current reward. Binace recapitulates the earlier halving and how it was a trigger for the increase in the price of Bitcoin. A year after the introduction of BTC, the price rose from $11 to $1,100, and after the second halving, from $600 to $20,000 in just over a year.

As a result, the event has raised high expectations in the crypto community. Many expect that the halving will have an effect similar to that of previous occasions. However, Binance is reviewing analysts’ views and concludes that the situation is different for this year:

“(…) the Bitcoin halving event of 2020 cannot be compared to previous halvings due to several factors, such as the increasing maturity of the market and better anticipation of the halving in the crypto-community, as well as the possibility that the effects of the halving are already priced into the current BTC prices.”

 

Is the halving of Bitcoin already priced in?

As we reported earlier, the debate remains controversial. There is no consensus on how the halving will affect the price or whether it is already priced in. Some have said that users and operators should bear in mind that halving will have no effect. Melem Demiros of CoinShares agrees with Binance’s thesis and states that this halving will be unique and that it is impossible to make a comparison with previous years.

Other analysts like Alex Krüger have said that a discussion is irrelevant so long before Halving. This argument is consistent with the historical price development of BTC, which reacted to the halving only 50 days earlier. Krüger also stressed that the miners will determine the outcome of the halving and that their behaviour is not predictable.

Arcane Research expects a market reaction after the event has occurred. On the other hand, Binance concludes that regardless of the course of the BTC price, an attack by the bears or a movement by the bulls, the halving will be a turning point in the history of Bitcoin next May.

Bitcoin’s price at the time of writing is $8,342, with losses of 1.50% in the last 24 hours.