Whether you call it the “halving” or the “halvening,” one of the few things we can be sure of in crypto is that the conversation around bitcoin’s upcoming reduction in mining reward will intensify over the next six months.
Why? Because previous halvings have triggered bull runs. And who doesn’t like a bull run?
Many are convinced that the next halving will have the same market effect, and it’s not just a belief that history repeats itself – models have emerged to support this theory.
But if the bull run is expected, why hasn’t it already happened? Why isn’t the halving already priced in?
Because the halving is much more than an event – it is also a narrative, and an uncertain one at that.
What and why
First, a review of what the halving is and why it happens.
To keep inflation under control, the bitcoin protocol was programmed with a hard limit of 21 million, with new bitcoins entering the system as an incentive for network processors (“miners”) in a gradual and controlled rhythm. The rate at which they are created is reduced by half every four years, ostensibly to mimic the increased difficulty of gold mining. On Nov. 28, 2012, the initial reward of 50 new bitcoins was halved to 25, and since July 9, 2016, miners have been receiving 12.5 bitcoins for each block successfully processed. Read More