How will the “Bitcoin Halvening” affect price? The upcoming bitcoin halving, or the event better known as “The Halvening,” of bitcoin is keeping everyone with an eye on the cryptocurrency speculating.
For many old time bitcoiners this event is nothing new as bubbles have come and gone and hopefully lessons have been learned.
For the newbs (newcomers to bitcoin) who have invested and are not particularly tech savvy, this can be a worrisome event as the media, bitcoin forums and social media gurus cover the wide spectrum of predictions of million dollar bitcoins, worthless bitcoins and every other price projection in between that one could imagine.
The term HODL, “Hold On for Dear Life,” comes to mind as the price swings could get real emotional through the end of summer and into the fall. If you are a long term investor it’s always safest to just tuck the bitcoins away in an offline wallet and stick the usb stick into a safety deposit box or home/office safe. But, if you are a savvy investor then you will be taking this opportunity to capitalize off of the volatility of the marketplace. Secondly, if you play your cards right then you could double up on investments by investing in the alt coin market while bitcoin makes it’s waves.
So, how will the “Bitcoin Halvening” affect bitcoin price?
I, for one, am speculating that bitcoin will have many ups and downs over the next few months and could reach the $1000-2000USD mark at some point this summer.
The thing is, the price of bitcoin could drop to $200USD as well.
The best way to hedge against a bitcoin shortfall is to split your bitcoin up into different alt currencies. You can easily do this by signing up to an exchange like poloniex.com, livecoin.net and bittrex.com to name a few of the more legitimate alt coin trading sites. I would recommend following along the general pattern that if bitcoin is going to rise, then the alt coins are going to fall (with the possible exception of litecoin and a few pump and dump schemes in between). The great news about alt coins dropping to possible new lows as bitcoin rises is that you can buy them cheap and capitalize on them later when bitcoin gravitates back to earth.
During the last spike back in early November 2015 when the price of bitcoin rose to over $500USD, the cryptocurrency market dipped to some all-time lows. If you had scooped up some MAIDSafe, Factom, Ethereum or STORJ coin, you would have made some serious bank just 4 months later as all of those crypto coins went up over ten times their value! You can look more recently from this past week when ethereum, everyone’s favorite new kid on the block(chain), dropped 50% from highs achieved less than a month ago as everyone is shorting the coin due to the expected rise of bitcoin in the coming weeks.
So, you’re thinking, “This should be a great point to buy into ethereum or one of the other fallen coins (favorite coins of traders like factom is down 70% and monero is down nearly 50%), since it’s down so much.” Not so fast jack, sure while these top 20 coins in the current coin marketcap are all possible future great coins, they most certainly are not the king of all currencies- Bitcoin.
Secondly, the alt coin market is generally based in bitcoin as the standard pair to trade against and if bitcoin rises then the alt coin has to fall unless some breaking news or developments occur during the bitcoin mooning. So for instance, ethereum was worth about $14 at one point and now it’s hovering around $8, but bitcoin has only risen 5% in that time. Ethereum didn’t have terrible news or anything happen for it to drop 40%.
The idea is that everyone right now is pulling their bitcoin from the alt coin market to ready themselves for the bitcoin rise. DASH is a great coin that is worth about $6 right now or .015 BTC. Bitcoin is worth $424 at the time of this piece and if bitcoin were to raise to $800 then you can bet your bottom bitcoin that DASH will significantly sail off the cliff to below .01 and probably deeper.
Now, DASH is a steady coin as of late so if it were to fall all the way down then it would be a great time to buy some because after bitcoin pops it’s new bubble then the price of bitcoin will fall and DASH will raise in terms of it’s bitcoin value. So, if you bought $100USD in DASH at .008 (while bitcoin hit $800USD) it would be worth nearly double as it rises back upwards to .015 (because bitcoin will fall back down) and probably beyond.
The idea is that you will double your bitcoin (or make possibly more) during these movements.
Now you need to understand why everyone is so sure that bitcoin is going to rise. The upcoming halving event that is supposed to happen in June/July of this summer is going to reduce the amount of bitcoins made every 10 minutes from 25 blocks to 12.5 blocks on the blockchain. This should ultimately reduce the new bitcoins made by half and hence, make the bitcoin more valuable.
Also, this deflationary method of currency will only produce just under 21,000,000 total bitcoins ever (there are currently just under 15.5 million in circulation). The idea is that, like gold, bitcoin will become rarer and ultimately more valuable.
The problem is that there is a bit of in-fighting amongst the bitcoin mining community and developers that have different ideas for the future of bitcoin. Should bitcoin be the next world currency or should it be more of a store of value and investment type of commodity? Other challenges point to the fact that once bitcoin becomes halved then how does the community deal with this as the cost of mining bitcoin will become way more expensive and the price would have to double to make up for the lack of blocks being developed now after the halving of bitcoin.
Some solutions have been presented by different camps including segwit, increasing block sizes and more, but if it turns out that bitcoin becomes less secure (because miners stop running nodes), the system becomes more centralized (due to the cost of mining for profit), or a newer and better version of bitcoin takes the reign then surely bitcoin will fall due to the trepidation of holding. So, pretty much everyone, even die hard investors and seasonsed traders are pulling their hair out asking, “What will bitcoin be worth this summer?”
The whole point is that reading bitcoin’s volatility can make you a millionaire if done right. I for one, am obviously not doing it right because I am typing this article, so don’t take this article as investment advice. This is just my brainstorm of what’s to come with the cryptocurrency. Feel free to share your thoughts on “The Halvening” in the comments below. How will “The Bitcoin Halvening” affect bitcoin price?