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How Is Bitcoin Halving Affecting The Price Of The Digital Asset?

By Rafał - 2020-05-10

If you are a crypto enthusiast or really anyone wandering around the Internet, you have probably heard about the upcoming Bitcoin halving. It is now set to happen in less than 48 hours and will cut rewards in half for miners. The current block reward is 12.5 coins and will decrease to 6.25 per block post halving.
Bitcoin only works because miners are solving extremely complicated mathematical problems in order to create blocks and process transactions. In return for their efforts, miners are rewarded with fees and a flat block reward that decreases in half approximately every 4 years. 
Bitcoin supply is limited and the block reward will eventually go to zero. Only 21 million Bitcoins will ever be produced. The last Bitcoin mined should happen around the year 2140 if all goes to plan. Bitcoin has experienced 2 previous halvings that tell us quite a lot about its reaction to such an event.
[caption id="attachment_8853" align="aligncenter" width="3097"]Bitcoin chart source: https://www.bitcoinblockhalf.com[/caption]
From the graph above, we can see that Bitcoin didn’t necessarily see any significant price moves during its halving event. In fact, it seems that during the first event, Bitcoin was trading sideways and kept trading sideways for a few months until a massive bull run. The last Bitcoin halving was worse as Bitcoin crashed during the halving and weeks after, however, again, after a few months Bitcoin saw another meteoric run towards $20,000 this time. 
Obviously, the past 2 halvings were different as the interest in Bitcoin was lower, adoption was lower and trading volume was lower. There is one thing clear, though, Bitcoin seems to benefit a lot from halvings a few months after the event. Will we see another Bitcoin run after this halving? Most analysts think so.

Factors Influencing The Next Bull Run

There are a lot of factors showing that Bitcoin is likely going to see another massive bull run after its halving. The crash on March 12 was definitely a big hit for the cryptocurrency, however, Bitcoin has been able to fully recover from it while the traditional stock market has remained stagnant. 
Not only that but the number of Bitcoins held on exchanges has decreased by almost 50%. This indicates that people are withdrawing their coins to personal wallets to hold them for a long time. 
If we look at the number of longs vs shorts on BitMEX and other exchanges, longs are clearly winning. Bitcoin longs are currently dominating shorts with over 80.8% in longs at $230 million even after the recent 20% crash. Ethereum longs are even higher at almost 90% with $300 million. It’s obvious that the sentiment is bullish and traders are willing to buy Bitcoin.