Every 4 years, the reward for mining bitcoin goes down by 50%. This is the “halving.” The next one will happen in May 2020.
Currently the “block reward” that miners receive every 10 minutes stands at 12.5 bitcoins. In May of 2020, it will be reduced to 6.25 new bitcoins every 10 minutes.
There are more than 17 million bitcoins in existence today, but there will only ever be 21 million. When the reward gets cut by 50%, there’s a lot less new supply coming onto the market.
The first two times bitcoin halved, it preceded a major bull run.
In 2012, the first halving, bitcoin was priced around USD 14.50. A year later, it was almost USD 1,000!
In 2016, the bitcoin reward halved at around USD 2,200. It dropped as low as USD 570 before the 2017 bull run.
The bitcoin halving is one of the top long-term catalysts you should be watching. Combined with the institutional entry into crypto, we’re probably seeing a nice increase in 2019 and 2020.
There will always be tough times in crypto’s early adaptor environment. It’s the price we have to pay. But the rewards should be well worth the risk. Don’t get too nervous about price drops. Look at the long term success of crypto currencies.
Sven Franssen