Popular maker of cryptocurrency hardware wallets, Trezor, has posted on its official Twitter page, reminding the cryptosphere that the next Bitcoin halving will take place exactly a year from now.
According to Trezor:
“In exactly 365 days we will experience the third Bitcoin halving in history. This event marks a 50% decrease of block rewards, lowering the total supply of bitcoins mined from one block to only 6.25 BTC. How will you celebrate this event?”
Halving is a set event which will occur after every 210,000 blocks are mined. This means that the number of Bitcoins produced as a block reward for every block will halve from the current 12.5 BTC to 6.25 BTC. This is done to slow the production of Bitcoin and prevent inflation.
Current estimations have it that a year from now, in May 2020 daily production of Bitcoin will drop to 900 from the current rate of 1,800.
Effects on Bitcoin Price
The simple laws of supply and demand would work here in Bitcoin’s halving. Since inception, halving has always had a significant effect on the price of Bitcoin. This is because, according to this law, when there is a scarcity and supply is reduced, prices almost always increase as a result.
So, because of this law and also because history suggests the same thing, experts are sure that when the halving does occur, the scarcity will cause a very significant price surge.
An analyst known simply as Plan B (@100trillionUSD) took to Twitter to express predictions that see Bitcoin hitting a $55,000 price mark when the halving occurs next year. According to the tweet:
“The model predicts a bitcoin market value of $1trn after next halving in May 2020, which translates in a bitcoin price of $55,000.”
The prediction also sees the Bitcoin market cap hitting $1 trillion. Explaining how such a figure would be achieved, Plan B says:
“People ask me where all the money needed for $1trn bitcoin market value would come from? My answer: silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey etc), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs.”