How Does The ‘Halving Event’’ Affect Bitcoin Price?

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From rags to riches. Literally, that’s the story of Bitcoin. Started of as a worthless currency but reached high, real highs when one Bitcoin began to cost $450. Could there still be something to boost the price even higher? The Bitcoin community calls it the ‘halving event’.

So what were the factors that set Bitcoin apart and paved a way for its success? It’s monetary policy, that was unlike the regular ones, definitely played a major role. Satoshi Nakamoto decided that, every ten minutes, roughly 21 million bitcoins initially. However, every four years, the number of bitcoins should fall by half, until it all was in circulation.

The question everyone has on their minds is, what is exactly does the ‘halving event’ mean? What’s the impact is it going to have? Well if we are to follow history it means a rise in its price. But this time it certainly looks a lot more is at stake. With the contribution of $1.15 billion made by venture capitals in the digital currency space, Bitcoin, who have a market capitalization value of around $7 billion seem to be affected. Investors are putting their Bitcoin-related investment vehicles into their retirement accounts.

How much is the drop going to be this time? The production of new bitcoins is going to fall from around 36,000 to 1,800. Now some analysts believe, that the current price of Bitcoin is inclusive of the effects of the ‘halving event’. Although, they still believe this is always subject to change for the mere fact of how liquid Bitcoins have become.

There is another analysts that believes, this rise in price is inevitable. If not anybody, at least economics back this theory. She says, it follows the simple principles of demand and supply and, so the halving effect reduces the supply by half, to say the least. However, even this rise in price has a condition. Only if everything else remains constant, and the supply falls, the price will rise.

But with Bitcoins current situation, who can say for certain, that other things will actually remain equal.

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  1. May 25, 2016

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