What is a bitcoin block halving? | BTC Direct

What happens to the bitcoin price after a block halving?

After a block halving, the amount of bitcoin a miner receives when he finds a block gets halved. When the very first block was mined, the reward was a staggering 50 bitcoin, although the market value at that time was nearly zero. After the first halving, the reward was reduced to 25 bitcoin, and the current reward per block is 12.5 bitcoin. The corresponding value in a fiat currency such as the dollar or euro is different at any given time, depending on the bitcoin price.

Some traders believe that a bitcoin block halving affects the price directly. The first halving took place in 2012. A year later, bitcoin reached a provisional all-time high. The same thing happened a year after the next halving, in 2017.

Is the block halving responsible for such price activity or is it just speculation? Currently there are 900 bitcoins mined each day, and the vast majority of those coins are sold instantly to cover for the mining expenses. When there is a halving, the number of coins that will be brought into the market will consequently decrease, leading to more scarcity. This is the best logical explanation that reflects on the price increases following block halving.

But will this happen after the last halving in 2020 as well? We really can’t say; the bitcoin price is volatile and since the halving dates are known, the increasing scarcity could already be taken into account leading up to the halving.