Bitcoin Cash is expected to halve its block rewards from 12.5 BCH to just 6.25 BCH per block on April 8, 2020. After this time, the rate of inflation will be cut by 50%, meaning the amount of newly minted coins entering circulation will be reduced by half.
As with the Bitcoin block reward halvings, Bitcoin Cash proponents widely consider the upcoming halving to an overly bullish event, since newly minted BCH will be harder to come by. Likewise, thanks to its impressive performance in recent weeks, there is little wonder why some have begun drawing parallels between Bitcoin’s Cash’s recent surge, and the bullish activity frequently seen by Bitcoin prior to its own halvings.
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Since reaching its price bottom of $76.29 back in December 2018, Bitcoin Cash has been on a slow and steady uptick, gaining almost 480% as of today. Much of this growth occurred in the past two months, across the turn of the new year—a time in which BCH more than doubled in value.
In the 18 months prior to Bitcoin’s July 2016 halving, BTC gained more than 300%, with much of this growth occurring two months prior to the halving date. Compared to Bitcoin, it is clear that Bitcoin Cash is indeed following a similar trajectory—at least in terms of pre-halving movement.
With that said, since Bitcoin Cash first diverged from Bitcoin back in August 2017, the cryptocurrency hasn’t yet completed a halving of its own. Because of this, it is not possible to backtest this observation and see if any parallels could be drawn in the past. As such, it would be premature to assume Bitcoin Cash will follow the same path Bitcoin did twice before.
Likewise, the market is far more developed now, with a huge number of cryptocurrencies competing for the limited new capital entering the market. As such, it is possible that this year’s growth—if it occurs—could be much more restrained than was seen by Bitcoin in the past. After all, at the time of the July 2016 halving, Bitcoin had a market dominance of more than 80%, whereas Bitcoin Cash currently has a market dominance of just 2.65%.
Overall, unless Bitcoin Cash either grows its market dominance considerably in the coming weeks, BCH is unlikely to follow the same halving trajectory as Bitcoin.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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